Opposition to ACA May Be Cause of Decreased Choice and Competition.
After the Trump administration and congressional Republicans spent much of 2017 trying to repeal the Affordable Care Act (ACA), this year the president has ended or curtailed several key elements of the law through policy changes. Much of this opposition has focused on concerns that regulation was driving insurers out of the ACA marketplaces, limiting choices for consumers and competition to keep down prices.
But a new study led by School of Public Health researchers suggests opposition to the ACA, not the ACA itself, may have been the cause of a dramatic decrease in insurer competition over the last two years.
The study, published in Health Affairs, found competition remained fairly stable in 2015 and 2016, with at least three ACA Marketplace insurers in 80 percent of counties (containing 93 percent of US residents). But these proportions declined sharply in 2017, and by 2018 only 36 percent of counties (60 percent of the population) had at least three competing insurers. This decrease in choice and competition was disproportionately in rural counties with higher mortality rates and higher insurer profit margins, and in states under Republican control that did not expand Medicaid.
“Simply put, Republican opposition to the ACA and associated Medicaid expansion seems to have been a self-fulfilling prophesy, leading to less robust competition in the Marketplace,” says doctoral candidate Kevin Griffith, the study’s lead author.
The researchers used 2014-2018 data from the Robert Wood Johnson Foundation’s Health Insurance Exchange (HIX) Compare database, which contains information on nearly every ACA-compliant individual and small-group marketplace plan offered in all 50 states and the District of Columbia.
First, they calculated the number of insurers participating in ACA marketplaces in each of the 3,142 counties and county-equivalents in the entire United States for each year from 2014 to 2018. They used data from the Centers for Medicare and Medicaid Services to identify subsidiaries of the same parent company and counted them as one insurer.
The researchers then looked for predictors for having fewer than three marketplace insurers. They used data from the Health Resources and Services Administration on county-level poverty rates, crude death rates, and per capita Medicare spending, and they used data from the Department of Agriculture to define each county as rural or urban. Data on ages and races/ethnicities of residents came from the Census Bureau.
Finally, the researchers assessed state party control. They also looked at key ACA-related policies, including whether a state had accepted the Medicaid expansion as part of the ACA, managed its own marketplace, or placed restrictions on the activities of marketplace navigators.
The researchers found limited insurer competition disproportionately in rural counties, counties with higher mortality rates, and counties where insurers had lower medical loss ratios—that is, potentially higher profit margins. They also found limited competition disproportionately in states where Republicans controlled both the governorship and the legislature. Decreased insurer competition was less common in states with higher proportions of residents who were Hispanic or middle-aged (45 to 64 years old), and in states that chose to expand Medicaid.
In a deeper analysis, the researchers found that the association with Republican control of state government was linked to Medicaid expansion: Republican control itself was not a predictor of limited insurer competition, but not expanding Medicaid was in fact the strongest predictor of limited insurer competition.
The authors also noted that Idaho, which will vote this November on whether to expand Medicaid, was the only Republican-controlled state that chose to run its own ACA marketplace. This level of government support for the ACA, the authors wrote, may explain why Idaho was the only Republican-controlled state that has not yet expanded Medicaid where the researchers still found that every county had at least three marketplace insurers in 2018.
That insurers fled counties with higher profit margins is puzzling, says Griffith, and may reflect the extreme uncertainty of the last two years of “repeal and replace” efforts and policy changes. “It shouldn’t be difficult for state regulators to convince additional insurers to join profitable markets,” Griffith says, “but Congress keeps changing the rules of the game.”
The study was co-authored by David Jones, assistant professor of health law, policy & management, and Benjamin Sommers of the Harvard T.H. Chan School of Public Health.