Insurer Participation in Obamacare Exchanges Declined 27% Since Law Took Effect

Report predicts insurer participation will decline further in 2017

May 18, 2016

Insurer participation in the Obamacare exchanges has declined by 27 percent since the year before the Affordable Care Act took effect, according to a report from the Heritage Foundation.

Three hundred ninety-five insurers offered individual market coverage in 2013, just before the Affordable Care Act took effect, according to the report. That number dropped to 253 in 2014 and ticked up to 305 in 2015. The number of insurers dropped again to 287 in 2016, a decline of 27 percent from the 395 participating insurers in 2013.

"Another measure is to assess changes in insurer participation on a state-by state basis," the report stated. "Relative to 2015, 45 percent of the states (22 states and the District of Columbia) have fewer insurers offering exchange coverage in 2016, while only 10 states have more insurers offering ACA exchange coverage."

The report analyzed the number of unique carriers offering exchange coverage in one or more states over the years. "By that metric, insurer exchange participation not only declined in 2016, but also is now less than in 2014," the report states. "At the national level, the number of carriers offering exchange coverage in one or more states was 154 in 2014, increasing to 155 in 2015, but declining to 137 in 2016."

The report predicted that insurer participation in the Obamacare exchanges will continue to decline next year due to pending health insurer mergers, insurers being forced off the market by state regulators, and the possible departure of carriers like UnitedHealth, which is reassessing its participation in the exchanges because of losses it incurred.

Insurers will also be affected when a valuable subsidy expires next year, according to the report.

"[T]he ACA’s ‘reinsurance’ provision imposed $20 billion in assessments on health insurers and self-insured employer plans for the first three years (2014-2016) and redistributed those funds to carriers offering individual-market coverage (both on and off the exchanges)," the report stated. "With that additional subsidy soon ending, more carriers will likely be taking a hard look at whether it remains financially feasible to them to continue offering exchange coverage."

The Department of Health and Human Services did not respond to requests for comment about the report.

Published under: Health Care , Obamacare