By Munira Z. Gunja and Emily R. Gee
A central feature of the Affordable Care Act is the establishment of the Health Insurance Marketplace (“Marketplace”). The Marketplace offers consumers a transparent and competitive platform to shop for health insurance coverage, apply for financial assistance, and purchase coverage without any medical underwriting or special premium adjustment based on pre-existing conditions.1 Based on preliminary data available for 44 states, there will be 77 issuers offering Qualified Health Plans (QHPs) through the State-based and Federally-facilitated Marketplaces (also known as Marketplace plans) for the first time in 2015, and 36 of the 44 states will have at least one new Marketplace entrant. In these 44 states, there will be 63 more issuers offering Marketplace plans in 2015 than there were in 2014. This represents a 25 percent increase in the total number of issuers offering Marketplace plans between 2014 and 2015.
Consumers who are shopping for Marketplace plans will be able to choose from among a significantly larger set of insurance issuers for 2015 than were available for 2014.3 Market entry results in more sellers while typically driving issuers to compete more aggressively on price and quality.4 This, in turn, offers consumers better value and more opportunity to pick the plan that best meets their needs.
1 This brief considers only individual market Qualified Health Plan (QHP) issuers, and not SHOP or stand-alone dental plan (SADP) issuers. SADPs offered through the Marketplace may still underwrite and adjust premiums.
2 For the purposes of this analysis, we refer to 36 states collectively as the Federally-facilitated Marketplace. These 36 states include 27 states that have Marketplaces fully run by the federal government, 7 that have State Partnership Marketplaces, and 2 that have federally supported State-based Marketplaces in 2014.
3 ASPE estimated that for 2014, 82 percent of people eligible to purchase a qualified health plan lived in rating areas with at least three issuers in the Marketplace, and 96 percent lived in areas with at least two issuers. For more information, see http://aspe.hhs.gov/health/reports/2014/Premiums/2014MktPlacePremBrf.pdf.
4 For example, an ASPE analysis found that in 2014, “Competition, as measured by the number of issuers in a rating area, [was] associated with more affordable benchmark plans (the second-lowest cost silver plan) for individuals and reduced costs for the federal government,” see http://aspe.hhs.gov/health/reports/2014/Premiums/2014MktPlacePremBrf.pdf."
Issuer Participation in the Marketplace
In 2014, there were 191 issuers5 offering Marketplace plans in the 36 states with Marketplaces supported by or fully run by the Department of Health and Human Services (throughout this brief referred to as the FFM). Complete and final information on 2015 issuers was not yet available at the time of this analysis. Preliminary information from 2015 issuer filings to the Centers for Medicare & Medicaid Services (CMS) Center for Consumer Information and Insurance Oversight (CCIIO) indicates that a total of 248 issuers will be offering Marketplace plans in the FFM, as shown in Table 1.6 This represents a 30 percent increase when compared with the 191 issuers offering Marketplace plans in these 36 states in 2014.
In the eight SBM states for which information was available, a total of 67 issuers will be offering Marketplace plans in 2015, compared to 61 issuers offering Marketplace plans in those states in 2014 (Table 2). This represents a 10 percent increase in the number of issuers offering Marketplace plans in those eight states.
Overall, there will be a 25 percent increase in the number of issuers offering Marketplace plans in 2015.7 The number of issuers is at least doubling in four states in 2015: Indiana, Missouri, New Hampshire, and West Virginia. In 30 of the 36 FFM states, and in six of the eight SBM states for which we have data, there is at least one new Marketplace issuer. California is the only state among the 44 with a decrease in the number of issuers in 2015 (from 12 to 10).
5 For the purpose of this analysis, we identify an issuer by its unique five-digit issuer Health Insurance Oversight System (HIOS) ID. In some cases, issuers with different HIOS ID numbers belong to the same parent company. An issuing entity’s HIOS issuer ID is specific to the state in which it operates, such that a company offering QHPs through the Marketplace in two states would be counted twice—once for each state.
6 Oregon and Nevada officials have announced that their state Marketplaces will be switching from SBMs to federally supported SBMs for 2015. Oregon and Nevada are not included in this analysis.
7 This increase is based on the 44 states for which data was available for this analysis.
Entry and Exit by Issuers in the Marketplace
Among the 36 FFM states, 67 issuers are expected to offer plans through the Marketplaces in those states for the first time in 2015. Indiana will have six new entrants in 2015, Ohio will have five new entrants, and Florida, Georgia, Michigan, Missouri, New Hampshire, and Pennsylvania will each have four new entrants. Among the eight SBM states with issuer data available, 10 issuers will be offering plans through the Marketplaces in those states for the first time in 2015. Colorado, Maryland, New York, and Washington will each have two new issuers entering their Marketplaces in 2015.
Among FFM states, Michigan, Ohio, and Texas are expected to have the greatest number of issuers in 2015 (16 issuers), followed by Pennsylvania and Wisconsin (15), and Florida (14). By comparison, in 2014, the greatest number of issuers in a state was 14 (Pennsylvania). While eight of the 36 FFM states had fewer than three issuers in 2014, only three FFM states are expected to have fewer than three issuers in 2015.
Among the eight SBM states for which we have data, New York has the greatest number of issuers in 2015 (17 issuers), followed by Colorado (12), and California and Washington (10). By comparison, in 2014, the state with the greatest number of issuers among these SBMs was New York (16).
Based on the preliminary issuer information for the 44 states included in this analysis, a total of 14 issuers that offered Marketplace plans in 2014 had not filed for Marketplace participation in 2015. We count these as “exiting” issuers. Based on the states for which information was available, ten issuers in the FFM and four issuers in the SBMs are not expected to participate in 2015. In at least six cases, however, the exiting issuer’s parent company continues to participate in the state’s Marketplace in 2015 through at least one other issuer.
Given that the number of new entrants is expected to be more than five times the number of exiting issuers among the 44 states included in this analysis, the Marketplaces will offer consumers significantly more choice for coverage in 2015 and appear to offer an increasingly attractive business opportunity for issuers.
Previous research has found that the number of issuers in a rating area is associated with more affordable premiums for benchmark plans (a four percent decrease in the premium of the second-lowest cost silver plan) for individuals and reduced costs for the federal government. Additionally, in 2014, areas with a larger number of issuers were found to offer a wider range of choices among plan types, such as preferred provider organizations (PPOs), health maintenance organizations (HMOs), and consumer-operated and oriented plans (CO-OPS).8 Furthermore, reports indicate that some of the largest insurers in the nation are increasing their participation in the Marketplaces in 2015.9 Independent research has found that participation by a large issuer could significantly reduce benchmark premiums.10
TABLE 1. Number of QHP Issuers in 2014 Federally-facilitated Marketplace States (1)
|State||Number of Issuers (2) (preliminary)*||Issuers Exiting in 2015 (preliminary)**||New Entrants in 2015 (preliminary)***|
|2014||2015||Net Change from 2014 to 2015|
|FFM Total (36 states)||191||248||57||10||67|
|New Hampshire (3)||1||5||4||0||4|
|New Mexico (4)||4||5||1||0||1|
|West Virginia (4)||1||2||1||0||1|