Health care insurers seem to be pulling out of the Affordable Care Act marketplace almost as soon as they’ve joined. Next year, 664 counties across this nation will likely have just one insurer available —that’s up from 225 counties this year that have only one insurer.
In 2017, 664 counties will likely have just one insurer available to consumers.
Of those 664 markets that will have just one provider, 462 are rural, said Cynthia Cox, a researcher at the Kaiser Family Foundation.
Alaska, Alabama, and Wyoming are all expected to have only one insurer on the health law’s signature online marketplaces next year, according to Edmund Haislmaier, an expert in health care policy and markets at The Heritage Foundation. In states such as Arizona, Mississippi, and Kentucky, some counties will only have one provider.
The Obama administration has aimed to curb costs by encouraging competition — but it is clear there’s no such thing for some people who obtain health care through the exchange.
So what happens to people in areas where there will only be a single provider?
‘Not a Lot of Choice to Start’
Haislmaier explained that it may not have much effect on people who are in rural areas and only have one health system to use.
“Does it make a difference if you have two insurers if there’s only one hospital system?” he asked. “There’s not a lot of choice to start with, because there’s not a lot of choice in providers.”
In some cases, it doesn’t make sense for insurers to be in those areas, Haislmaier added.
[lz_bulleted_list title=”Obamacare Losses” source=”McKinsey & Company”]In 2014, insurers lost $2.7 billion on the individual health insurance market, which includes the marketplaces. Those losses doubled in 2015.[/lz_bulleted_list]
He suggests people who are upset about having only one choice look at purchasing insurance from insurers. For example, Mississippi Blue Cross/Blue Shield is not on the exchange. They’re the largest insurer in the state — and consumers can purchase health insurance policies directly from them. The only caveat there is that you won’t receive a subsidy from the federal government if you were eligible for it.
The ACA is turning into a “fairly narrow niche market,” due to the income restrictions it places on enrollees, Haislmaier said. The lack of competition hasn’t improved since the law was passed.
“In some cases, it’s actually damaging peoples’ choices — it’s limiting choices for people who don’t get subsidies,” he said.
Limitations More Prominent in One-Provider Regions
Joe Graves, a life and health insurance broker from Nashville, Tennessee, said nearly all of his enrollments were with one carrier recently.
“I foresaw the quasi one-payer system,” he said. “We’ve been living in almost a one-company world since this started.”
For most people, less competition won’t make a difference. Metropolitan areas will still have more variety, but that doesn’t mean their plans will be better. He sees plenty of people struggling to afford plans that do not let them see the doctors they want — the opposite of what Obama promised.
The “mindset of only having one flavor to choose from” will have an impact on consumer perceptions, though, Graves noted. Most plans in the exchange don’t differ much.
“The whole law has decimated profits [and] decimated networks to choose from,” he said. “It’s not the carriers’ fault [if they pull out]. They’re just doing what they can to try to survive.”
“It’s devastating,” he said of the marketplace. “We’re in a race to the bottom.”
Tim Marema, editor of a news website published by the Center for Rural Strategies, has an individual policy he did not buy on the exchange. His state — Tennessee— is one facing areas with only one provider.
Marema said that the ACA lowered his premium by about half — he had a policy for pre-existing conditions — but it’s edging back up. Though it’s still less expensive than before, he understands the challenges that people in rural areas (and those with only one insurer choice) will face.
“One choice is no choice, whether you live in the country or the city,” he noted. “If urban markets are experiencing a lack of competition, the situation is only going to be worse in rural areas, where the markets are smaller and more vulnerable.”
“‘Take it or leave it’ is not a market solution,” Marema said. “Unfortunately, rural areas often have less competition for ‘must-have’ services like health care … that makes no sense.”
“The nation needs a healthy, vibrant rural America to provide the energy, fiber, and food we all depend on. Allowing insurance corporations to cherry-pick where they serve hurts us all in the long run,” Marema added.
By summer’s end, the U.S. will have a better view of which counties will be with just one provider — or none, if that happens, said Cynthia Cox.
Costs Going Up?
Cox’s latest figures come as a House panel claims that Andy Slavitt, acting administrator at the Centers for Medicare & Medicaid Services, misled Congress last year by appearing to say that the government had already recaptured hundreds of millions of dollars from struggling state exchanges under the ACA.
Federal officials say there is only about $21 million that was kept from being spent — during testimony last year, that number was $200 million. The government gave $4.6 billion to states to run their own health care exchanges, according to an article by The Washington Times.
Even if less competition does not make a difference in areas with limited providers, it still means things will cost more, said Dr. Vivian Ho, director of Rice University’s Baker Institute for Public Policy in Houston, Texas.
“Whenever there is less competition, prices will be driven higher,” she said.
“The marketplace encourages competition, but it’s relatively expensive for insurers to establish networks of providers in rural areas when there aren’t many hospitals and physician groups to choose from,” she added. “The potential to attract new customers may not be worth the additional cost, particularly if enrollment is expected to be low.”
Cox said reinsurance is just one aspect of the original program that is phasing out, which is expected to raise premiums about 5 percent. It’s hard to say if having one provider in a market will raise costs. If an insurer chooses to charge consumers more, there are provisions in the ACA to control costs. Without competition, she is not sure they would pass savings along to consumers.
“There’s been so much volatility,” she said. “It’s really changed from year to year.”
Cox said that by summer’s end, the U.S. will have a better view of which counties will be with just one provider — or none, if that happens.
“From a consumer perspective, choice is different from competition,” Cox said. “It may be surprising to go online and see you only have one insurer to choose from when you previously had three.”