Health Insurance Marketplaces: Findings on Changes in Plan Availability and Premiums, 2014-2016

This project examines the Health Insurance Marketplaces (HIMs) implemented in the Patient Protection and Affordable Care Act of 2010 (ACA) and assesses the changes in HIMs from 2014 to 2016 in terms of percent change in premiums, with emphasis on how these measures vary across location (states, rating areas). In addition, the number of firms entering and exiting marketplaces is studied to monitor the effects of increases and decreases of firm participation on percent change in premiums. This research also focuses on key issues including: how changes in premiums relate to population density, how change in premiums occur both regionally and across rating areas, and how change in premiums relate to Medicaid Expansion and Non-Expansion states.

Data.  The data are from a comprehensive file on available Federally-Facilitated Marketplace (FFM) plans and premiums by rating areas in 2014-16, supplemented by state-based marketplaces (SBMs). The federal file was released by the Department of Health and Human Services and the state files were obtained by the researchers by various methods (obtained from the states).  The data are used to assess firm entry and exit and changes in premiums across rating areas, using descriptive and multivariate methods.  Premiums are all adjusted for cost of living, so that the premium is expressed in terms of the purchasing power of a dollar in a particular geographic setting.  The “average adjusted premium” is also a weighted average of all metal levels, in the sense that platinum, gold, and bronze premiums are adjusted via an actuarial value calculation to their equivalent cost as silver plans.  Population density data and several other variables come from the Area Health Resource File (AHRQ) at the county level, aggregated to the rating area level.

Results. While in 2014 and 2015, there was no obvious pattern affecting variation in premiums, a few isolated places experienced uneven experiences (higher premiums, less choice). In 2016, we find less postive outcomes in some more remote areas.  Across several measures that we examined, evidence shows that premiums rose more in areas with less population density, in general.  In addition, firm participation is a major factor affecting premiums.  Where more firms are located, premiums are lower in general, and where more insurance firms entered, the premium increases were lower, consistent with economic theory.  Areas that lost firms typically experienced higher premium increases.  In addition, the decision to expand Medicaid is shown to be associated with lower premium increases, which we hypothesize lowers premium increases because the influx of federal dollars compensate, to some extent, for healthcare costs that previously were “uncompensated” and therefore passed along to the insured population in the form of higher premiums.  States which have not expanded Medicaid are tacitly continuing to fund uncompensated care in part by passing along these costs to the insured.