This is part one in a series of articles on shifts impacting Affordable Care Act Exchanges. We’ll take a closer look at enrollment, the broker market, and proposed regulatory changes to Healthcare.gov.
This year’s open enrollment was one of the most dynamic in the history of the Affordable Care Act. High-profile insurtechs pulled out of key markets, causing millions of members to search for alternatives. A new wave of entrants and incumbents expanding their presence stepped in to fill the void. Early data from the Centers for Medicare and Medicaid Services show Healthcare.gov added 2.6 million consumers as of January 7, bringing the total for the 33 federal Marketplaces to 11.9 million. Total ACA enrollment — federal and state-based exchanges — tallied 15.8 million, a 13% increase from the same period last year.
We’ll delve into ACA enrollment in future articles as data continues to roll out from CMS. For this article, we analyzed changes across the federal exchanges to identify the lowest cost insurer for the most ACA enrollees in each state.
The biggest shakeup in the ACA was Bright Health’s departure from 15 markets, forcing 970,000 members to find alternative plans, with the largest membership in Colorado, Florida, North Carolina, and Tennessee. While Bright Health was successful in quickly gaining significant scale and membership through aggressive pricing, it could not translate that into sustainable profitability.
Bright was not the only one right sizing. Friday Health Plan left on-exchange products in Texas, the second largest Exchange market in the country. Oliver Wyman’s national scan of pricing in Federally Facilitated Exchanges shows Friday Health Plan ceded its lowest cost position in many geographies, remaining price competitive in only a smattering of smaller counties within its existing footprint. At the other end of the spectrum, insurtech Oscar Health put the brakes on new ACA enrolment in Florida as a means control growth.
Insurers that made gains will not only have to adjust to a wave of new members but drive efficiencies across their organizations to remain on track for controlled sustainable growth amidst record high competition and cost of care pressure.
Enter the Incumbents
As the start-up health plans pulled back, traditional insurers stepped in. CVS/Aetna was particularly aggressive, entering California, Delaware, Illinois, and New Jersey, and expanding in Arizona, Florida, Missouri, and Texas. The moves drove significant price competition, with Aetna being the lowest cost option for 27% of ACA members in its FFE Expanded Bronze and, primarily, Silver metal tier markets (Aetna does not offer any bronze plans). Cigna expanded in Georgia, Mississippi, and North Carolina, and entered three new markets — Indiana, South Carolina, and Texas. Cigna priced aggressively, particularly in the largest markets in Texas, where it is the lowest price for 52% of the market, and Georgia, where its plans are the lowest cost for 62% of the market.
These players had an unprecedented opportunity to capture orphaned members. This added to the tailwinds from the Inflation Reduction Act, which expanded premium subsidies through 2025; the Internal Revenue Service’s regulatory fix to the family glitch, as well as anticipated Medicaid redeterminations once the Public Health Emergency ends. It will be a year of growth and expansion, assuming these players can take advantage of targeted marketing, broker incentives, and outreach to win members, especially the ones auto assigned to them by the states.
The real challenge is being adaptable and nimble enough to achieve long-term sustainability and avoid the trap that Bright encountered during its expansion. Retaining membership while maintaining pricing will be difficult, especially considering inflation-driven pressure from providers to increase rates and the risk adjustment uncertainties of Bright’s generally healthy membership. Bright Health paid out almost $1 billion in Plan Year 2021 in risk transfer payments across all markets; success under risk adjustment will remain imperative for player’s success in the market (see our 6 keys to success in the Exchanges).
Carriers will also face a crowded market: the average number of carriers per state increased from 4.5 to 6.5 over the last three years. Establishing a unique toehold in the market will be difficult. The recently released Notice of Benefit and Payment Parameters for 2024 Proposed Rule seeks to further alter the type and number of plans carriers offer — either through limiting the number of non-standard plans, or dictating differences between non-standard plans offered — and streamline marketing names. Meaningful differentiation will require creativity and deliberate, granular decisions to optimize every inch of the business’ operations, member experience as well as product and geographic scope.
Navigating the continued volatility and uncertainty in the Exchanges is an exciting challenge and opportunity. Stay tuned for additional insights on succeeding in the Exchanges in the coming months.
Terry Burke and Travis Kistler contributed to this article.
How we calculated the lowest costs plans:
- We sized each Bronze, Expanded Bronze, Silver, and Gold1 metal tier per county based on 2022 plan selections
- Then we identified the carrier with the lowest cost 2023 premium per metal tier in each county, and attributed the relevant metal tier market size to them
- We repeated this analysis for each county and totalled the results at the state level to find which carriers were the cheapest for the most people on the Exchange in Bronze, Expanded Bronze, Silver, and Gold
- For example: In Florida, Centene (Ambetter) is the lowest cost carrier for 30% of Exchange members, followed by Florida Blue HMO with 23% of Exchange members
Expanded Bronze market size was estimated based on national trend of Bronze vs. Expanded Bronze enrolment. Platinum and Catastrophic tiers were not analyzed due to the relatively small size of those markets. Plan selections attributed to those metal tiers, plus any selections for undislosed plans are included in the "remaining" market data points.