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Plan Participation and Premium Growth in 2017 Exchanges

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As 2017 exchange open enrollment begins, Avalere examined marketplace changes in plan choice and premiums at the county level.

Our county-level analysis is available here. Plan participation has decreased significantly from its peak in 2015, when counties had an average of 5.2 issuers, down to 4.8 issuers in 2016 and only 3.2 issuers per county in 2017.

In 2017, one-third of counties will only have one participating issuer in their exchange-down from only eight percent of counties in 2016.

Five states-Alaska, Alabama, Oklahoma, South Carolina, and Wyoming-will only have one participating health plan. An additional eight states will have one participating health issuer in the majority of their counties:

North Carolina

How Are Premiums Changing?

Enrollment weighted premiums for the benchmark (second-lowest) silver plans will increase by 22 percent on average nationwide, though premiums vary widely from state to state and region to region. For instance, average benchmark premiums in Indiana and Massachusetts will decrease by three percent in 2017. However, in Arizona, benchmark premiums will increase by 116 percent in 2017.

Notably, 130 counties across Arizona, North Carolina, Nebraska, Pennsylvania, Tennessee, and Texas saw their benchmark premiums increase by more than 75 percent from 2016 to 2017.

Why Is Plan Choice Decreasing and Premiums Increasing?

There are three primary factors that driving market instability in 2017. The first is low enrollment. As of 2016, the exchange market was less than half the size of what was projected when the Affordable Care Act was passed (10.4 million enrolled compared to estimates of 22 million for 2016).

As a consequence of low enrollment, consumers in the exchange are also older and sicker, which drives up medical costs. Recent research conducted by our team found that individuals 55 years and older make up 26 percent of exchange enrollees, despite being just 16 percent of the eligible population. In our 2017 Open Enrollment Preview, Caroline Pearson explained:

“Low enrollment has been a major factor contributing to escalating exchange premiums. In 2014 when the exchanges began, high-need enrollees flocked to the program. Since then, subsidies and mandate penalties have not driven enough participation among younger, healthier individuals.”

Lastly, the absence of reinsurance has also played a role in premium increases. Furthermore, the risk-adjustment model is both inaccurate for some enrollees and unpredictable for health plans, which has caused financial hardship for some insurers. This white paper lays out the challenges with risk adjustment.

Access our county level data here.

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