Markets remained concentrated among small number of issuers

A Government Accountability Office (GAO) study which examined the early impact of the Patient Protection and Affordable Care Act (ACA) (P. L. 111-148) on private health insurance markets found that markets remained concentrated among a small number of issuers in most states, consumers generally had access to more health plans in 2015 than in 2014, and enrollee satisfaction with exchange-issued plans was either somewhat lower than or similar to that of enrollees in employer-sponsored plans. The findings were presented by the Director of Health Care in testimony before the House Committee on Oversight and Government Reform, Subcommittee on Health Care, Benefits, and Administrative Rules.

Background. Many ACA provisions which took effect in 2014 affected how issuers determined health insurance coverage and premiums and how they marketed their plans. Issuers were prohibited from denying coverage or varying premiums based on consumer health status or gender, and the ACA also required health plans to generally be marketed based on tiers denoted as bronze, silver, gold, and platinum, which allowed consumers to compare the relative value of each plan. The establishment of health insurance exchanges in each state was required so that consumers could compare and select from among participating health plans. In order to evaluate the early impact of the ACA on private health insurance markets, the GAO issued three reports in 2015 and 2016 which examined market concentration, plan availability and premiums, and enrollee experiences since the 2014 provisions became effective.

For the reports, the GAO examined data from CMS, reviewed published research, and interviewed stakeholders including experts and officials from CMS and five states—Colorado, Indiana, Montana, North Carolina, and Vermont—that varied both as to geography and as to whether the state established its own exchange, or whether CMS offered plan access by way of a federally facilitated exchange (FFE).

Market concentration. In a 2016 report the GAO examined enrollment in private health-insurance plans in the years leading up to and through 2014, the first year of the exchanges established by the ACA, and found that in all years analyzed, markets were concentrated among a small number of issuers in most states. On average, in each state, 11 or more issuers participated in each of three types of markets—individual, small group, and large group—from 2011 through 2014. However, in most states, the 3 largest issuers in each market had at least an 80 percent share of the market during the period. Not all issuers in the individual and small group markets participated in the exchanges in 2014, and several exchanges had fewer than 3 participating issuers. Enrollment through the exchanges was generally more concentrated among a few issuers than was true for the individual and small group markets overall in 2014.

Plan availability and premiums. The GAO also examined the availability of health plans for individual market consumers and found that consumers generally had access to more health plans in 2015 than in 2014. In both years, most consumers in the 28 states for which the GAO had sufficiently reliable data, had 6 or more plans from which to choose in three of the four health plan ‘metal tiers’ (bronze, silver, and gold). The range of premiums available to consumers varied considerably by state and in most states the costs for the minimum and median premiums for silver plans increased from 2014 to 2015. In both years, the lowest cost plans were typically available on an exchange. More recent analyses by HHS found that in 2017 all consumers continued to have multiple plan options, and premiums for exchange plans increased more in 2017 as compared to the annual increases for these plans since 2014.

The metal tier designation categorized plans by their actuarial value, which reflected the amount out of pocket costs that may be incurred by an enrollee. Bronze plans, with an actuarial value of 60 percent, tended to have the lowest premiums but left consumers subject to the highest out-of-pocket costs when they received health care services, while platinum plans, with an actuarial value of 90 percent, tended to have the highest premiums and the lowest out-of-pocket costs. In addition to these metal tiers, catastrophic plans were available for certain individuals who were exempt from the requirement to have minimum essential coverage.

Advantage of using exchanges. In general, plans available on either a state-based exchange or an FFE, were also available for sale outside of the exchanges allowing consumers to work directly with an insurer to purchase a plan without using an exchange. However, the ACA provided incentives for consumers to use the exchanges instead of purchasing plans directly from an insurer, which included eligibility for tax credits to help pay for premiums. In addition, the exchanges were required to provide certain consumer assistance functions in order to facilitate an individual’s selection of and enrollment in exchange coverage.

The combination of all of these provisions allowed consumers to use the exchanges to directly compare the health insurance plans available to them based on premium costs, benefits covered, and plan generosity. According to HHS, enrollments in the exchanges increased every year since 2014, with about 11 million individuals having purchased health plans through the exchanges in 2016, up from about 7 million in 2014.

Enrollee experiences. Another 2016 report by the GAO examined national survey data to examine the satisfaction level of exchange enrollees. The report found that from 2014 through 2016, most enrollees who obtained coverage through an exchange reported being overall satisfied with their plans. In 2015 and 2016, the satisfaction level that exchange enrollees reported with their plans was either somewhat lower than or similar to that of enrollees in employer-sponsored plans. Exchange enrollees reported varying degrees of satisfaction with specific aspects of their plans including coverage and plan affordability.

The report also revealed concerns regarding exchange enrollee experiences which were generally consistent with longstanding concerns in the private health insurance market, including concerns about affordability of out-of-pocket expenses and difficulties understanding coverage terminology.

SOURCE: GAO Report, GAO-17-383T, January 31, 2017.

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