On Oct. 1, 2013, President Barack Obama lauded the opening of the Affordable Care Act’s new health insurance exchanges and claimed, “You’ll find more choices, more competition, and in many cases, lower prices.”
In his latest paper tracking choice and insurer competition in the exchanges, Heritage Foundation senior fellow Ed Haislmaier reports that fewer insurers are offering exchange coverage in 2016 compared to 2015. His paper examined insurer competition using three different measures.
The first is the number of insurers offering exchange coverage in the 50 states and the District of Columbia. For this measure, insurers that offer exchange coverage in more than one state are counted for each state (as exchange participation is a state-level decision). By this standard, there are 287 exchange participating insurers in 2016, compared to 307 in 2015.
While the participation level in 2016 is greater than the 253 insurers that offered exchange coverage in 2014, the figures for all three years are still well below the 395 insurers that offered individual market coverage in 2013, prior to the law taking effect.
The second measure is the number of insurers offering exchange coverage in each state. Relative to 2015, the results are that 45 percent of states (22 states and D.C.) have fewer insurers offering exchange coverage in 2016, while only 10 states have more.
The third is the number of unique carriers selling exchange coverage. For this measure, each insurer is counted only once, regardless of the number of states in which it offered exchange coverage. Applying this metric for nationwide insurer participation finds that there were 154 different carriers offering exchange coverage in 2014, increasing to 155 in 2015 but dropping to 137 in 2016.
A related report, issued by the office of U.S. Sen. Ben Sasse, R-Neb., looked at exchange competition at the county level. It found that in 2016, there is only one insurer offering exchange coverage in 225 counties (7.2 percent), another 915 counties (29.1 percent) have only two exchange insurers, and a further 841 counties (26.8 percent) have three competing insurers.
Thus, for residents of more than one-third of all U.S. counties (36.3 percent), exchange competition is limited to an insurer monopoly or duopoly, and almost two-thirds (63 percent) of U.S. counties have three or fewer insurers offering exchange coverage.
In response to these findings, “HHS argued there was no justification for excluding insurers who still offer plans off the exchanges.”
As noted, the president himself predicted that the exchanges would increase competition. Yet competition has declined even if insurers offering coverage outside the exchanges are included. The Government Accountability Office found that, at the state level, there were 1,235 insurers providing individual market coverage in 2013, and using the same methodology, the figure for 2016 is 960.
And as for the president’s predictions that the exchanges would lower prices “for many,” three years later, those claims haven’t proved true, either. In reality, premiums are up—in many cases, substantially—while choice and competition in most of the country are down.