One-third of U.S. may be limited to one choice of insurer on exchanges in 2017

Nearly 36 percent of the exchange market rating regions in the U.S. may have only one insurance company participating in the Affordable Care Act (ACA)’s exchanges, according to an analysis from Avalere.

If insurers don’t decide to expand their exchange offerings, the figures would represent a large decrease in competition compared to the 2016 plan year, when only 4 percent of regions had only one carrier. The percentage of regions with two or fewer insurers would also increase, from 33 percent for the 2016 plan year to 55 percent in 2017.

“Lower-than-expected enrollment, a high cost population, and troubled risk mitigation programs have led to decreased plan participation for 2017,” Dan Mendelson, president of Avalere, said in a statement. “Congress and the Administration can choose to stabilize these markets and re-establish competition—but only through a consensus process that brings in a broader swath of the uninsured.”

The analysis said seven states currently have only one insurer participating in all its rating regions: Alaska, Alabama, Kansas, North Carolina, Oklahoma, South Carolina and Wyoming.

Avalere based its analysis on publicly announced departures from the exchanges. It’s possible the number of one-carrier regions could be reduced if insurers decide to expand their participation ahead of the beginning open enrollment on Nov. 1. Some expected exits, however, haven’t been counted, meaning the analysis could also “undercount the number of regions with limited competition.”

In a press release along with the analysis, Avalere offered several broad policy recommendations to mitigate the effects of decreased competition on the exchanges:

• Stabilizing the market through changes to risk mitigation program, like making the expiring reinsurance program for insurers permanent.
• Changing current enrollment rules, such as restrictions and eligibility requirements for special enrollment periods and new incentives to “encourage enrollees to maintain continuous coverage.”
• Increasing enrollment through greater funding for outreach, increased subsidies, or stronger penalties on those who remain uninsured.
• Making the exchanges “more more attractive to younger, healthier individuals,” by changing the age rating provisions, allowing older customers to be charged more and reduced younger people’s premiums.

Several of these changes have already been proposed by HHS in an effort to improve the risk pool on the exchanges.

The recent reversal of Aetna’s plans to expand its exchange participation has left open the possibility of at least one county, Pinal County in Arizona, of having no carriers on the exchange for 2017.