Obamacare’s marketplaces aren’t just struggling with higher premiums — they’ll also have significantly less competition next year.
The number of counties with just one health insurer selling on Healthcare.gov will more than quadruple this year, rising from 182 counties in 2016 to 960 counties in 2017.
That’s significantly higher than any other year.
The lack of competition in Obamacare is worrisome for a number of reasons.
Obamacare customers, obviously, have less choice when they live in one of the 960 counties that have only one insurance plan. Most economic research shows that concentrated insurance markets tend to have higher insurance premiums — and the areas of the country with the steepest Obamacare rate hikes next year tend to be the places with just one insurer.
The prevalence of one-insurer counties leaves Obamacare in a somewhat precarious place. If any of those insurers decide to exit and stop selling, areas could be left with zero insurers — a situation that nearly happened in one Arizona county this year.
And if that does happen, the health care law doesn’t have a backup plan to fix it.
"This is a tough situation because there isn’t a good contingency plan right now," says Caroline Pearson, senior vice president at the research firm Avalere Health, who focuses on the Obamacare marketplaces.
Five states have just one health insurer on Healthcare.gov
UnitedHealth announced in April that it would stop selling on the marketplaces after suffering more than $1 million in losses. Aetna followed in August, reducing the number of states where it sells from 15 to four.
There was an initial expectation that some smaller plans would come in and fill the gap these two large national plans had left. But that didn’t pan out: 45 insurers left Healthcare.gov in 2017, and only five joined.
The level of competition varies significantly from state to state. We built this map below to show what competition will look like in the 39 states that use the Healthcare.gov marketplace (the other 11 states run their own marketplaces).
Forty percent of counties will have just one insurer selling in 2017 — although federal data suggests these are some of the more sparsely populated parts of the country, as only one in five Obamacare enrollees live in these places.
There are five states — Alaska, Alabama, Oklahoma, South Carolina, and Wyoming — that only have one insurer participating in their marketplace.
An additional two states are nearly in the same situation. Arizona is served by just one insurer in the entire state aside from one county (Pima County, where Tucson is), and in North Carolina there are five counties with two insurers selling — and 95 counties with only one option.
Some of these places were initially on track to get more competition, but the upheaval over the summer gave small insurers pause.
The startup health plan Canopy Health, for example, initially planned to enter the Wyoming but had a change of heart as it watched other carriers get cold feet.
"We're actually regrouping and won't be on the marketplace this year but in 2018," said Tracy Faigin, a spokesperson for Canopy. Instead, Canopy is "reevaluating markets with all the turmoil."
States with the biggest premium increases tend to have some of the lowest insurance competition
The changes to Obamacare premiums vary hugely from state to state, from Arizona’s 116 percent rate increase to Illinois’s 3 percent rate decrease.
Federal data does show that states where insurance plans have left tend to have higher premiums. Of the four states that will have just one insurance carrier, three are experiencing higher-than-average rate increases. Oklahoma’s rates for a midlevel insurance plan will rise 69 percent; in Alabama, the same plan will increase 58 percent.
All of these rate increases are before subsidies. Most Healthcare.gov shoppers will receive financial help from the government, which will insulate them from the premium spikes. But 17 percent of Healthcare.gov enrollees don’t receive subsidies, and if they live in places where costs are rising sharply, they may face some tough decisions about whether they can afford their health insurance plans.
“They aren’t eligible for subsidies and will feel the full brunt of the increases,” says Larry Levitt, vice president for special projects at the Kaiser Family Foundation. “The group you worry about leaving is people who are healthy and who are buying insurance because they think it’s the right thing to do. They may decide that the higher prices aren’t worth it.”