Despite a few outliers, most state exchange markets have avoided the stigma of only offering plans from a single insurer. That will change in 2017, although it might say less about the Affordable Care Act’s success or failure than the staying power of those markets’ historic compositions.
While the many rural counties nationwide have faced the dilemma of one exchange option, the growth of lone-insurer exchanges after just three open enrollments shows the difficulty in injecting new competition into health insurance markets.
Sparsely populated states have been most susceptible to the trend. Before the ACA went into effect, they were also the most likely to be dominated by a single carrier, usually a Blue Cross Blue Shield plan.
Only West Virginia has soldiered through all three open enrollment periods with just one carrier selling policies (Highmark Blue Cross Blue Shield of West Virginia). In Wyoming, the federal flop on risk corridor payments in late 2015 doomed WinHealth, which received too many high-cost enrollees and was liquidated before 2016 open enrollment.
New Hampshire has been the exception – enrollees endured 2014 with Anthem Blue Cross Blue Shield of New Hampshire as the only exchange carrier but in subsequent cycles, competition improved.
Despite Moda Health’s improved financial picture in Oregon, it won’t rejoin the Alaska exchange, leaving just Premera Blue Cross. Alabama’s exchange will lose both UnitedHealthcare and Humana; only Blue Cross Blue Shield of Alabama remains. Kansas technically has two competitors, although the Kansas Blue and the Kansas City Blue plans’ operating areas do not overlap, so exchange consumers will only have one choice of insurer.
Each state has its own market quirks. Eliminating competition does not mean the markets are collapsing. If anything, the markets are reverting to their norms. Alabama has been a one-insurer states for ages, its Blue plan boasting the nation’s largest state market share. The market has been virtually impervious for new entrants.
Aside from Alabama, none of these states are especially populous. But they point to a particular problem that predates the ACA – it’s hard for carriers to build a presence in new states. Incumbents possess huge advantages in name recognition and customer loyalty.
For now, all we know is local insurance markets remain highly resilient to infusions of new competition. The markets have yet to produce a zero-insurer exchange, nor has any county been bereft of any exchange options. Those ugly alternatives constitute real threats for exchange market sustainability.