The Affordable Care Act (ACA) created health insurance marketplaces to make it easier for consumers to shop for and compare plan options in one place. As of December 24, 2016, over 11.5 million people had signed up for coverage through the marketplaces, and the U.S. Department of Health and Human Services projects that 13.8 million consumers will have selected a plan for 2017 by the close of this open enrollment period.
However, our new president and Congress are committed to the repeal of the ACA. Repeal could cause as many as 30 million to lose coverage, 9.3 million of whom receive federal premium assistance through the marketplaces. Nearly one-third of these enrollees reside in the 17 states that embraced the chance to set up and manage their own ACA marketplace.1 All but one of these states also expanded their Medicaid program and most incorporated the ACA’s consumer protections into their own state insurance laws, effectively adopting them as their own. These states not only embraced the ACA’s vision of improving access to affordable, quality health coverage, but also took full advantage of the flexibility for states provided under the law to design an insurance market to meet local needs.2
Within days of the ACA’s enactment, legislators, agency staff, and health care stakeholders from these states began working to develop the policy and operational infrastructure needed to build and maintain a sustainable health insurance marketplace. Doing so not only gave these states greater autonomy and flexibility to manage their insurance markets, but also allowed them to tailor public education and outreach efforts to their local population.
Dramatic Coverage Gains in State-Based Marketplaces Will Likely Be Lost
Moreover, several state-based marketplaces report early success in the most recent enrollment period, meeting or exceeding enrollment targets. For example, in Colorado, enrollment has been tracking 18 percent ahead of last year’s benchmark, while in Minnesota, over 54,000 residents have so far enrolled in private coverage, more than double the previous year’s pace.
Improved Access to Care and Financial Security at Risk
Early data suggest that consumers are not only generally happy with their new coverage options, they are using it to get and stay healthy. The Commonwealth Fund’s national surveys of marketplace enrollees find that three-quarters of enrollees are satisfied with their health insurance, and many are accessing care they wouldn’t have been able to obtain otherwise. A handful of the state-based marketplaces have conducted their own surveys and the findings are similar. Eighty-two percent of Washingtonians are satisfied with their marketplace insurer, 79 percent of Vermonters say their health plan meets their needs, and two-thirds of Minnesota’s marketplace enrollees say they would re-enroll in the same plan.
In addition, evidence is emerging that expanded coverage is helping people obtain needed care and lower medical debt. For example, since 2013, California has witnessed a reduction in the number of people who forgo necessary care because of cost. Kentucky had a 20 percent drop from 2012 to 2014 in the number of residents who reported problems paying medical bills.
Relatively Stable Markets Face Potential Chaos
Though many insurers reported losses on their marketplace (or exchange) business and some have scaled back marketplace participation in 2017, state-based marketplace officials have had relative success encouraging stable insurer participation. Fourteen of the original state-based marketplaces have the same number or only one insurer less compared to when they first launched (Exhibit 2).3 Among the 12 states experiencing a net decrease in the number of insurers since 2016, nearly half are a result of one company’s exit (UnitedHealthcare).
This relative stability is unlikely to continue if Congress repeals the ACA’s individual mandate and premium tax credits. Not only will millions lose coverage, these provisions of the law are essential to bringing healthy individuals into the insurance market. Without those healthy enrollees, insurers will need to raise rates dramatically to cover the costs of a sicker population or exit the market entirely, leaving consumers with fewer and less affordable options. If this happens, many of the state-based marketplace states will work hard to stabilize their markets and keep people covered, but they cannot succeed without federal support and financing. Those states that embraced the law, leaned in to tailor its reforms to meet local needs, and saw dramatic progress in reducing the numbers of uninsured now face the prospect of that progress being reversed.
1 For the purposes of this analysis, we count the District of Columbia as a state. Enrollment includes Hawaii, which recently transitioned to the federal marketplace with the state maintaining plan management responsibilities, and does not include Arkansas, which transitioned to a state marketplace using the federal platform for the 2017 benefit year.
2 One of these states, Massachusetts, adopted market reforms and created a marketplace prior to enactment of the ACA. Its efforts provided a model for the ACA’s coverage expansion provisions.
3 Data reflect issuer participation in a state-based marketplace; they do not reflect decisions by insurers to expand or contract their service areas within states.