Marketplace Pulse: Broad Range of Insurers Enter an Increasingly Competitive ACA Marketplace

The Marketplace Pulse series provides expert insights on timely policy topics related to the health insurance marketplaces. The series, authored by RWJF Senior Policy Adviser Katherine Hempstead, analyzes changes in the individual market; shifting carrier trends; nationwide insurance data; and more to help states, researchers, and policymakers better understand the pulse of the marketplace.

Though the Affordable Care Act (ACA) faces another existential threat with the controversial Texas vs. California case scheduled for a November hearing before the Supreme Court, insurer interest in the marketplaces continues to rise. Available information for 2021 reveals increased participation from a widening group of carriers. This will mark the third straight year of increased offerings, and the reasons are not hard to decipher.

First is the premium stability and profitability in the marketplace in recent years. And though enrollment has been flat, the marketplace is an increasingly important bridge to growing opportunities in Medicaid and Medicare Advantage. The current economic dislocation has caused a drop in employer enrollment that increases the importance of developing other markets. And in the event of a new administration, increased subsidies and a potential public option could boost marketplace growth considerably.

A good example of the widening range of participation is the United Health Group’s (UHG) return to the marketplace. At its peak, in 2016, United was in more than 30 states, selling marketplace plans in nearly one-third of all counties. In 2017, they executed a nearly complete withdrawal, remaining only in a handful of counties in a few states. This situation remained largely unchanged until recently, when United has announced re-entry in six states so far: Virginia, Maryland, Oklahoma, North Carolina, Washington and Tennessee. These are all states where UHG currently sells Medicaid, or where the opportunity to participate in Medicaid may present itself in the future.

While United is returning to some states, it is not necessarily re-occupying all of the same territory, a decision that reflects the increased competitiveness of the marketplace. In Tennessee, for example, UHG participated statewide in 2016, before withdrawing entirely. In 2021, they are choosing their spots, and will be in roughly half of the state's counties. Most of the time they will compete with Blue Cross Blue Shield and/or Cigna, and will stay out of counties occupied by Oscar, Bright Health, and/or Centene, but there are some exceptions. In the lively Nashville area, for example, all six carriers will offer plans in a metro area with a population one quarter the size of New York City.

In addition to UHG, a number of other insurers that substantially withdrew from the marketplace are increasing their participation. Both Anthem and Cigna have announced some expansion to additional counties in their existing states. They are joined by newer companies that have been steadily building their marketplace presence. Oscar, Bright House, and Friday Health Plan have announced expansion or entry in at least sixteen states. Centene and Molina have additionally announced expansions, but the growth in participation that has in recent years been dominated by Medicaid managed care organizations (MCOs) this year reflects a broader array of insurers.

The strong connections between Medicaid and the marketplace are more evident than ever. The percent of counties with at least one "overlap plan," a carrier participating in both Medicaid and the marketplace, will rise, as UHG and others enter the marketplace in places where they already participate in Medicaid. The interest in states that are expanding Medicaid and/or transitioning to managed care is clear, with considerable new participation in Oklahoma, Missouri, and North Carolina. Given the economic uncertainty, there may be more churn than usual between these two segments, and consistency in coverage and provider networks may help enrollees stay connected to care. Overlap appears to be beneficial from both a cost containment and patient standpoint, although we should remain vigilant about the potential for excessive consolidation in these markets.

The connections between the marketplace and Medicare Advantage are increasingly recognized as important, given the older age distribution of marketplace enrollees. Among the many insurers who have recently announced new Medicare Advantage plans include marketplace insurers like Oscar and Bright Health. The prospect of lowering the eligibility age for Medicare under a Biden Administration only enhances the importance of the marketplace to Medicare Advantage plans, and could eventually tempt the return of the largest Medicare Advantage carrier, Humana, and/or Aetna/CVS, which increased its Medicare Advantage offerings considerably this year.

As seen by the upcoming court case, the politicization of the ACA is ongoing. Yet the contours of growing marketplace participation reveal insurers’ perceptions of the business opportunities, wherever they may be. Over the past few years, choice has increased in areas which had previously been less well served, including in states which had not been particularly supportive of the ACA. This has led, for example, to entry in metro areas in Tennessee and Texas, and statewide entry in Iowa and Nebraska. This year Molina will expand in Mississippi, and Oscar will enter Arkansas, Iowa, North Carolina, and Oklahoma. And despite the intense lobbying by providers and insurers against the specter of a public option, through groups like the Partnership for America's Healthcare Future, state reform efforts do not seem to have raised the threat level excessively. Washington State’s public option, Cascade Care, will be offered by five carriers. In Colorado, another state with an ambitious policy agenda, including ongoing efforts to create a public option, five carriers have announced expansions for 2021.

While the federal government seeks to use the Supreme Court to repeal the law, insurer investment in the marketplace will grow for the third straight year. There is a political narrative about the ACA, but there is also a business narrative. Increasingly they diverge.

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