On August 24, CareSource announced that they would offer healthcare plans in the last “bare” county in the country, Paulding County, Ohio. Earlier in the summer, the Centers for Medicare and Medicaid Services (CMS) issued a map showing over 40 counties that would have no insurers in the healthcare marketplace for next year. With the CareSource announcement, every county in the country has at least one insurer in the marketplace.
Although every county now has an insurer, it does not resolve a bigger issue in the United States, which is that a large percentage of the country has only one company to choose from for healthcare in the marketplace.
According to the most recent CMS map, nearly 47 percent of the country will have just one carrier on the exchange, limiting choice nationwide. That 47 percent covers 1,476 counties and leaves over 2.6 million people with no choice in carrier for the upcoming year.
There are several reasons that insurers are leaving the Affordable Care Act (ACA) marketplace. One explanation for insurers pulling out of the exchanges is that the ACA was based on every state expanding Medicaid, the federal-state program that provides medical insurance for the poor. After a Supreme Court case in 2012 ruled that the government could not require states to expand their programs, 19 states opted not to participate in the expansion.
This put a bigger burden on states to entice lower-income enrollees to the marketplaces. But some customers fall into a coverage gap in which they can’t afford premiums but make too much money to qualify for Medicaid.
Absent those customers, the marketplace has had to rely on participation from young and healthy enrollees to offset the cost of care for older people – and most states haven’t seen the numbers they need to keep carriers from fleeing the marketplace.
Individual Mandate and Cost Sharing Reductions
Low participation isn’t the only reason that insurers have bailed for 2018. Some insurers claim that they’re leaving because there’s no guarantee that they will receive cost-sharing reduction payments to defray medical costs for people with low incomes. The ACA guarantees carriers these payments so that they can offer lower premiums to lower-income customers.
Another factor contributing to fewer choices next year is an executive order signed by President Trump in January that allows the IRS and other agencies to grant relief of tax penalties imposed by the individual mandate that requires all Americans to have health insurance. Without threat of a tax penalty, it could mean that fewer young and healthy people will sign up for health insurance, perpetuating the cycle of rising costs, higher premiums and hesitant carriers.
Impact of Limited Plans
Regardless of the reason insurers have chosen to leave the marketplace, the fact is that having only one insurer to provide health insurance limits a consumer’s ability to shop for affordable healthcare. One of the biggest issues facing consumers in the counties with just one option is that they could face premium increases of 20 percent or more. In some areas, there has been talk of rate hikes as high as 60 percent if the Trump Administration does not continue cost-sharing reductions as outlined in the ACA. As it stands, CSR payments have only been funded through August.
Monopoly of Service
Although there were many predictions in early summer that portions of the country would have no options for health coverage, analysts also predicted that an insurer would step in to cover those areas since doing so would give the company a monopoly on service. Being the only insurance company in a county means that it has more leeway to set prices for profits. Despite limits on how high insurance companies can raise rates for those in lower-income categories, middle-income families may face significant rate increases in areas where there is only one option.
There is still time for insurance companies to offer policies in the counties with just one option. The deadline for making that decision is September 27. However, most experts believe that there will be few changes to the ACA marketplace for 2018 from this point forward and that consumers will be forced to use the one option available to them in their county if they want or need exchange-based health insurance for the year.