Since its implementation, the Affordable Care Act, often referred to as Obamacare, has allowed millions of Americans to obtain health insurance, but has faced a number of challenges. New research on competition within the ACA marketplaces in five states points to strengths and weaknesses.
At a presentation hosted by the Brookings Institution and the Rockefeller Institute of Government, Dr. Michael Morrisey, professor and head of the Health Policy and Management department at the Texas A&M School of Public Health, delivered a summary of findings collected by a wide-ranging group of field researchers working across the country. “This is really a team effort,” said Dr. Morrisey.
The purpose of this study, Morrisey said, is to understand the experiences of states in the exchanges, describe the idiosyncratic nature of insurance marketplaces and develop new testable ideas about how exchanges develop and evolve. To do this, researchers looked at marketplaces in California, Florida, Michigan, North Carolina and Texas, states with different political and regulatory environments that each had different marketplace approaches. The teams looked at insurer participation and withdrawal, network structure and changes in the exchanges or regulatory environments that either helped or hindered competition.
One of the major findings of this study is that health insurance markets are local. “It’s a mistake to think of Texas as one market,” Dr. Morrisey said, “Houston is different than Dallas and Temple is different than Midland.” A key issue is the ability of insurers to contract with providers at prices that allow the insurance premiums to be competitive. If there is only a single hospital or a single health system in a community, it’s difficult for insurers to develop a price advantage that allows for competition.
This “localness” of markets has implications for interstate insurance competition as well. The presumption is that fewer regulatory limits on insurers will lead to cross-state competition.
“It may,” Dr. Morrisey said, “but the real impediment is the ability of an insurer to create a viable network of providers. It seems unlikely that a new insurer entering a new state can rapidly create a cost-effective provider network able to compete with existing insurers already in the community.”
Another study finding was the nature of claims costs, especially during the first two years of the ACA. There was little reliable information available at the beginning and it was only in the third year of the exchanges that insurers had reliable information that their claims costs exceeded their assumptions, and did so by substantial margins. This raised concerns about adverse selection into exchange plans and related concerns about how to mitigate and adjust risks for this selection bias.
The information from this study will be useful in light of possible future replace or repair options for the ACA.
Learning how to reach and inform consumers will help improve enrollment, manage the risks posed by less healthy populations and improve insurer competition and provider availability at the local level, all valuable lessons that will be crucial regardless of how the health insurance landscape changes.
Although Dr. Morrisey and others caution against generalizations from their 5-state study, they conclude that if policymakers craft an ACA replacement that continues to rely on insurer markets, they should bear in mind that large local differences exist; that there is uncertainty about adverse selection and risk mitigation; and that market competition is dependent on the local provider base.
Drs. Morrisey and Tiffany Radcliff, associate professor at the Texas A&M School of Public Health, authored the Texas study, and Morrisey along with others authored the 5-state summary.
For more about this research and to read the individual state reports and summary report, visit: https://www.brookings.edu/research/how-has-obamacare-impacted-state-healthcare-marketplaces/
See CSPN’s coverage of Dr. Morrisey and others presenting their research findings.