Health Insurance Health Reform

Choice matters

What happens when consumers have have fewer health plan choices? In single payer markets, this may just result in less satisfied individuals. In the U.S., however, individuals can opt of of one type of insurance (e.g., health insurance exchanges) and into others (e.g., Medicaid, private insurance). One interesting question is empirically, how does the number of health plan choices affect consumer decisions to remain in an ACA exchange plan.

Using 2015-2018 data from and enrollment data from CMS’ Multidimensional Insurance Data Analytics System (MIDAS) , a paper by Crespin and DeLeire (2019) try to get at this question. They specifically look at what happens when a consumer’s health plan exits from their ACA exchange. In this case, they individual can: select selecting a plan with a different insurer on the exchanges, seek coverage in the individual market outside of the exchange, or going without coverage. The authors find that health plan exits were correlated with increased risk of consumer disenrollment ACA exchanges.

The increase was twice as large for unsubsidized consumers (18.3 percentage points) than for consumers who received subsidies in the form of Advance Premium Tax Credits (8.7 percentage points) and was largely independent of premium increases measured using the lowest-cost silver plan available. However, premiums increased more in areas affected by insurer exits than in unaffected areas, contributing to increased disenrollment among unsubsidized consumers in policy years 2016–18.

This question is an important one as many insurers have left the exchanges (a.k.a. Marketplaces) in recent years.

Insurer participation reached its peak in 2016, when 232 state-specific insurers offered plans in the states.2 However, by 2018 the number of participating insurers had declined to only 132.2 The insurers of 28.1 percent of returning consumers in 2017 and 13.8 percent in 2018 had exited the Marketplaces

The article also notes that premiums are not the only important factor for consumers. Provider networks and expected out-of-pocket costs gained in importance relative to premiums in one survey cited.


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