Marketplace Pulse: Overlap Between Marketplace and Medicaid Continues to Increase

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.

During a year where massive disenrollment in Medicaid and record-breaking enrollment in Marketplace plans have been major news stories, changes in Medicaid and Marketplace participation by Managed Care Organizations (MCO)s have been understated, comparatively speaking. Our updated Medicaid and Marketplace participation map reveals trends in county-level participation in both markets and their intersection.

Previously we described Marketplace participation for 2024 as characterized largely by increases in footprint among established players, leading to more choices for many customers. At the same time, there is increasing overall concentration in the individual market, as a smaller number of large national insurers gain more market share. 

The Medicaid market is also concentrated, but the cadence of participation is different, since it is determined by state procurement processes and state requirements about service areas and the desired numbers of competitors.

There were several Medicaid changes of note:

• In California, Kaiser Permanente gained ground at the expense of Centene and Elevance, who lost 17 and 13 counties respectively. 
   
• Oklahoma will begin their transition to managed care imminently, providing a new market for Centene, CVS Health/Aetna, and Humana who will all provide service statewide.
   
• Humana expanded its service area in Wisconsin through a small acquisition, as did Molina, which acquired My Choice Wisconsin.
   
• CareFirst, having lost a highly contested procurement battle, left DC's Medicaid Market in 2023.  

Overlap between the Marketplace and Medicaid has continued to increase. In 2024, approximately 75% of counties have at least one MCO offering both Marketplace and Medicaid plans.  

Many of the largest marketplace providers have a high and increasing degree of geographical overlap. Centene, the leading marketplace insurer, has plans in both markets in 65% of the more than 2,100 counties in which it participates. Elevance overlaps in 40% of the nearly 1,700 counties in which it participates.  For 2024, UnitedHealth Group increased the percentage of counties in which they overlap from 25% to 35% .

In light of Medicaid redeterminations, there has been a lot of interest in transitions between Medicaid and the marketplace. MCOs that participate in both markets in the same county have a natural opportunity to steer members from their Medicaid plan to their marketplace plan. This transition could potentially be beneficial for members, if it makes it easier to retain providers and maintain continuity of care, although some analysis suggests that provider networks are far from identical. To the extent to which increased transitions help to maintain coverage, they could improve health equity, though there may be a long run impact in terms of market power and consolidation.

It was initially estimated that approximately 1.5 million people would transition from Medicaid to the marketplace, roughly half of the 3 million that were estimated to be eligible to do so. We have yet to know how many of these transitions will ultimately take place, but data released by CMS suggests that more than 1 million transitions had taken place in states that use the  Healthcare.gov platform alone by October of 2023, suggesting that the number of these transitions will exceed projections.

The redetermination process has likely led to a permanent improvement in the connectivity between Medicaid and the marketplace. With the marketplace identified as a rapidly growing and important market, co-location with Medicaid should be an increasingly important part of strategy for the small number of large plans that are coming to dominate the individual market. It remains to be seen whether this will put plans without a Medicaid business at a disadvantage and to what extent overall consolidation in health insurance will be furthered by strategic linkages between market segments. Smaller non-profit plans are feeling pressure to combine and participate in multiple markets to fend off the inevitability of takeover, resulting in the dystopian scenario described by SCAN Group CEO Sachin Jain MD: “One day we’re going to wake up, and everything is going to be run by three big for-profit companies in this country.”