Thousands of Obamacare Customers Left Without Options as Insurers Bolt

By Hannah RechtHannah Recht

Tens of thousands of customers who get their health insurance through the Affordable Care Act marketplaces could lose their coverage for 2018. Several insurers have already decided not to offer marketplace coverage next year amid financial risk and Republican stop-and-go efforts to replace the law. Their exits mean that customers in certain counties could be left with no plans to choose from. And that number could still grow, as other major insurers are still deciding if they’ll offer plans next year, and how much customers will have to pay if they do.

More than 12 million people have enrolled in individual marketplace plans this year. Customers in states such as Idaho, Maryland and Oregon have long been able to choose between several companies. But many other states have seen options dwindle.

Number of Exchange Insurers, by Year
Insurers
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2
3
4 or more
Data not available
2014
2015
2016
2017
Sources: Bloomberg analysis of data from HealthCare.gov and state marketplaces.

Competition Is Strong for Most, but Not All

In the 2017 open-enrollment period that ended on January 31, many areas of the country had limited options for marketplace plans, particularly in rural areas and states using HealthCare.gov. One-third of all counties, including all of Alaska, Wyoming, Oklahoma, Alabama and South Carolina had just one insurer.

Insurer Choices by County
Sources: Bloomberg analysis of data from HealthCare.gov and state marketplaces.

Still, most customers live in areas with at least three insurers. Such states as Massachusetts, New Hampshire, Idaho and New Mexico, as well as many large cities across the country, had robust competition in 2017. According to Bloomberg analysis of HealthCare.gov and state marketplace data, more than one in three customers had at least four insurers to choose among.

Insurer Choices for Customers
Sources: Bloomberg analysis of data from HealthCare.gov, Centers for Medicare and Medicaid Services and state marketplaces.

By many measures, the law has had some success. The uninsured rate is at a record low, people with pre-existing conditions no longer face lifetime spending limits or coverage denials and women can no longer be charged higher premiums than men. Nearly 75 million people are covered by Medicaid and the Children's Health Insurance Program, a 29 percent increase from 2013.

For people who do get their health insurance through Obamacare marketplaces, coverage options tend to be significantly affected by whether the marketplace is run by a state or by the federal government. Customers in states that fully run their own marketplaces tend to have the most options. In 2017, 11 states, plus the District of Columbia, run state-based marketplaces, taking responsibility for all aspects—including infrastructure, plan regulation and customer outreach. Seventy-seven percent of customers in these states had a choice among four or more insurance companies.

Five other states run state-based marketplaces but rely on HealthCare.gov for infrastructure. The remaining 34 state marketplaces are mainly or entirely run by the Department of Health and Human Services. In these federally run marketplaces, only 29 percent of 2017 customers had four or more insurer options.

Insurer Choice Highest in State-Based Marketplaces
State-based marketplaces
State-based, using HealthCare.gov
Federally run marketplaces
Sources: Bloomberg analysis of data from HealthCare.gov, Centers for Medicare and Medicaid Services and state marketplaces.
Note: Six states operate in partnership with HHS, according to the Kaiser Family Foundation: Delaware, Illinois, Iowa, Michigan, New Hampshire, and West Virginia.

In the coming months, we’ll know more as to which companies will remain and which may exit the marketplace. Virginia insurers were required to file initial rates for 2018 last week, and one insurer, UnitedHealthcare, decided to exit the state’s marketplace next year. In most other states, insurers must submit proposed rates for 2018 by mid-June. But some insurers haven’t waited to announce their intentions.

Iowa Loses Insurers for 2018

Iowa, which uses HealthCare.gov, may face challenges next year. Aetna and Wellmark, which currently offer plans in Iowa, both recently announced that they’ll leave that marketplace in 2018. Aetna, which marketed its plans under the Coventry Health Care of Iowa brand in 2014 and 2015, operates in 76 of Iowa’s 99 counties. Wellmark sells marketplace plans in 40 counties.

Without Aetna and Wellmark, two companies would be left operating in Iowa: Gundersen Health Plan Inc. and Medica Insurance Co. Medica offers plans statewide, while Gundersen offers exchange plans in just five northeastern counties. Unless Gundersen expands or another company enters for 2018, most Iowans will have Medica as their only option.

Iowa Counties Left With Few Insurers After Wellmark, Aetna Exits
Insurers
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2017 insurers
Insurers without Wellmark and Aetna
Source: Bloomberg analysis of data from HealthCare.gov.

According to data from the Centers for Medicare and Medicaid Services, 51,573 Iowans selected plans in the 2017 open-enrollment period. Over half of those customers had a choice among three insurers. Only 7 percent—customers in 13 rural counties—had just one option.

Humana Exit Forces Tennessee to Find Solutions

Tennessee is the first state in which some areas will have no insurers in 2018. Humana announced in February that it won’t offer marketplace plans next year, leaving customers in 16 eastern Tennessee counties with no marketplace options. According to Bloomberg analysis of data from the Centers for Medicare and Medicaid Services, 46,214 customers selected plans in those counties in 2017—82 percent of whom received premium subsidies.

If another insurer doesn’t offer coverage there, or if lawmakers don’t offer an alternative solution, these customers won’t be able to get subsidized coverage in 2018.

As Tennesse Senator Lamar Alexander, a Republican, explained in a February health committee hearing, “We may reach a situation in 2018 where many Americans have a subsidy through the Affordable Care Act to buy insurance in the individual market, but they don’t have any insurance to buy. It’d be like having a bus ticket in a town where no buses run.”

Under the Affordable Care Act, low- and middle-income customers can purchase subsidized coverage through HealthCare.gov and state-run marketplaces. But if a county doesn’t have marketplace insurers, customers can’t buy subsidized coverage. They could still buy non-marketplace plans directly from insurers, but they’d have to pay full-price—far beyond what many of those customers would be willing or able to pay.

Humana's Exit Leaves Eastern Tennessee Without Options for 2018
Insurers remaining after announced exits
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Areas where Humana operates in 2017
Sources: Bloomberg analysis of data from HealthCare.gov, Centers for Medicare and Medicaid Services and state marketplaces.
Note: Companies counted as having already announced exits are Humana, Wellmark, UnitedHealthcare in Virginia, and Aetna in Iowa.

No question looms larger for insurers than the continuing funding of cost-sharing reductions (CSRs): subsidies that lower copayments, deductibles and other out-of-pocket expenses for 58 percent of customers.

Customers receving CSRs pay insurers reduced prices for their care. The federal government then directly reimburses insurance companies.

It's not clear if the Trump administration would be willing to pay CSR bills next year or beyond. Meanwhile, House v. Price, an ongoing lawsuit originally filed by House Republicans against the Obama administration in 2014, continues to challenge the payments’ legality.

On April 12, a group of organizations that includes BlueCross BlueShield Association, America’s Health Insurance Plans and the American Medical Associations sent joint letters to President Trump and Congress warning that “if reliable funding for CSRs is not provided, it may impact plan participation, which would leave individuals without coverage options.”

The political uncertainty adds to existing insurer complaints, including large financial losses that caused companies like UnitedHealthcare to exit in many states last year.

Anthem, a major BlueCross BlueShield provider across the country, already signaled that it may stop offering plans in some areas or raise prices. If Anthem exits in all states, nearly 250,000 additional customers would be left without marketplace options.

If Anthem Exits, Many Areas Would Be Without an Insurer for 2018
Insurers remaining if Anthem exits
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1
2
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4 or more
Areas where Anthem operates in 2017
Sources: Bloomberg analysis of data from HealthCare.gov, Centers for Medicare and Medicaid Services and state marketplaces.
Note: Companies counted as having already announced exits are Humana, Wellmark, UnitedHealthcare in Virginia and Aetna in Iowa.

Decision Day Draws Near for Insurance Companies

If more large insurance companies leave the exchanges, lawmakers will have to act. Senator Alexander and fellow Tennessee Senator Bob Corker, also a Republican, introduced a bill on March 29 that would allow subsidies to be used on approved off-exchange plans for customers with no exchange options—but implementation could be difficult since some companies would have to accept premium subsidies for the first time and would face new oversight.

Finding a solution could become more pressing. Several of the largest marketplace insurers, including Aetna and Cigna, haven’t announced their plans for 2018 in most states yet. Some insurers could choose to leave the marketplace in some areas while preserving coverage in others. But if these companies chose to exit the marketplaces entirely, the number of counties with no marketplace insurers would start to skyrocket, putting the long-term stability of the Affordable Care Act in question.

Coverage Options for 2018 if Additional Major Insurers Exit
Click to remove insurers from the map
Sources: Bloomberg analysis of data from HealthCare.gov, Centers for Medicare and Medicaid Services and data provided by state marketplaces.
Note: 2017 enrollment reflects total enrollment in a given county, regardless of insurer. Companies counted as having already announced exits are Humana, Wellmark, UnitedHealthcare in Virginia, and Aetna in Iowa.