It’s a common refrain that all exchanges are close to collapsing, but the level of troubles varies wildly from exchange to exchange. You don’t have to look far to exchanges that either succeed or struggle. Politicization of healthcare complicates an objective view of the exchanges and how they function.
Markets in the Midwest – Wisconsin, Michigan and Ohio – remain stable and competitive. The West Coast has stayed in strong condition. Even low-population red states like Idaho and Montana have retained a respectable amount of statewide competition.
The map where exchanges struggle is just as broad. Rural counties in almost every state face a dearth of options, usually a local Blue plan and a second option if lucky. The pre-ACA challenges have not changed – small populations put fewer enrollees in play for new competitors, rural networks are harder to build, the rural population skews older and less healthy. No matter how this round of healthcare reform stacks up, expect at least some rural counties to face the prospects of zero exchange insurers in 2018.
As a region, the Southeast tends to struggle, with less-healthy populations, most states rejecting Medicaid expansion and fewer younger people enrolling though exchanges.
Five states have only single insurer – Alaska, Alabama, South Carolina, Oklahoma and Wyoming. States with a single issuer were not necessarily in bad shape. Wyoming has only one insurer for the second consecutive open enrollment, and that monopoly resulted in a modest average premium increase of 7 percent. The Alabama Blue plan already boasted a commercial penetration rate in excess of 95 percent, leaving new competitors at a distinct competitive disadvantage.
Meanwhile, the eyes of industry are on what payers actually do in 2018 and they’ve circled June 21 as a key date. In a recent draft bulletin from CMS, insurers have until June 21 to file suggested their rates for exchange-based plans in 2018, a later deadline from the current deadline of May 3. This extension will give insurers more time to map out their strategy in this increasingly complex environment. Republican efforts to repeal and replace the ACA ran aground on March 24 but even before then, the exchanges were slated to remain for 2018.
As we await those filings, Decision Resources Group has identified a handful of markets where exchanges face major pressures and possible collapse.
With good reason, President Donald Trump cites Arizona every time the Affordable Care Act comes up. Fewer markets have seen their fortunes turn so sharply. Arizona’s exchange market started promisingly enough – some of the nation’s lowest premiums and high levels of competition in its two urban counties. A CO-OP underpriced the market in 2015, zoomed to the top market share, then rocketed out of business once the steep claims came due. Premium rates have soared as competition plummeted. In 2016, Arizona nearly had the only county with zero exchange carriers until BCBS of Arizona extended coverage into Pinal County enrollees.
With Humana pulling out of all exchange markets for 2018, the Knoxville could face the zero exchange carrier quandary. This was compounded by a last-second market retraction from the Tennessee Blue plan, which abandoned the state’s three largest markets (Knoxville, Memphis and Nashville) shortly before open enrollment began. Blue plans have not departed from the exchanges en masse. But the loss of a few indicates bigger competitive troubles for 2018.
- North Carolina
A victim of its own success, North Carolina trailed only Texas and Florida in exchange enrollment among states using healthcare.gov. But the volume of enrollees has strained BCBS of North Carolina, which dominates the overall commercial market and the exchange market. Other carriers have come in and out of the North Carolina market, and the smaller plays only sell plans in the urban markets of Charlotte and Raleigh-Durham.
Once strong in competition for a state wholly opposed to the Affordable Care Act, Oklahoma has slid into the same position as many states. Its few regional plans dropped out along with the fewer national carriers that sold in the exchange. Only the Oklahoma Blue plan remains.
The struggles of MNsure, Minnesota’s state-run exchange, differ from the other states. Minnesota already had a high insured rate and with relatively small eligible population, the population has been unprofitable for the few insurers vying for exchange business. Rising premiums and threats of a mass pullout from insurers have shaded the exchange. It’s unlikely that the exchange will see its prospects improve in 2018.
Together, these are some of the key markets we are monitoring ahead of the June 21 deadline – a date that essentially maps out the contours of the market for next year. Whether the exchange markets in these states sally forth for another year or collapse from lack of participation will be more apparent at that time.
To hear more on the future of the exchanges and the evolving healthcare environment, attend our upcoming Webinar on June 27, entitled “The Politics of U.S. Healthcare - Exchanges in the Trump Era.” Registration available here (https://decisionresourcesgroup.com/events/webinar-series-politics-u-s-healthcare-exchanges-trump-era/).
For more on the exchanges and healthcare, follow Bill Melville @BillMelvilleDRG