Insights into the 2022 individual health insurance market #Insights #individual #health #insurance #market Welcome to Lopoid
It has been eight years since the Affordable Care Act’s health insurance exchanges launched in 2014.
During that time, the individual market has been highly fluid, with insurer participation, pricing, and plan types evolving dynamically from year to year. The 2022 open-enrollment period (OEP) allows for an assessment of the latest movements in the individual health insurance market.
Several salient features have emerged, particularly in light of the substantive changes created by the American Rescue Plan Act of 2021. Using data scraped from nearly every health insurance exchange in the country, McKinsey’s Center for US Health System Reform has uncovered critical insights relevant to consumers, payers, providers, private equity sponsors, and policy analysts.
The Center for US Health System Reform’s analysis of the 2022 OEP led to the following conclusions:
Insurer participation and new product offerings have accelerated in the past four years (the halfway point since the marketplace launched), with levels near or surpassing their all-time peaks.
Managed-care plans—particularly health maintenance organization (HMO) plans and exclusive provider organization (EPO) plans—have grown steadily since 2014 and now account for 82 percent of plan type offerings.
Consumers increasingly have access to more insurer choices and plans in their home counties; only about 2 percent of consumers have access to just one insurer.
Across all plan tiers, prices (premiums) remained largely stable, with only slightly higher price increases in 2022 than in 2021; consumer cost burden was also reduced by additional subsidies created by the American Rescue Plan Act.
Annual premium growth of plans in the 15 states with section 1332 innovation waivers was observably lower than similar plans in the 35 states plus Washington, DC, without waivers.
Overall, the individual market has continued its recent trajectory of increased participation by insurers and consumers. Pricing has largely stabilized in the past several years, and consumer access has grown as newer, tech-enabled insurers bring greater choice to the market.
But uncertainty remains, in part because the enhanced premium subsidies created by the American Rescue Plan Act are due to expire at the end of 2022. If Congress does not renew these subsidies, pricing and consumer participation may face headwinds in the 2023 OEP.
2022 brought healthy participation growth
In 2022, 55 new insurers entered the market (a 21 percent increase over 2021), marking the highest growth in participation since 2015, when participation grew 26 percent.
Participation in the past two years has exceeded the 252 insurers that initially entered in 2014, with 305 total insurers in 2022.
Insurer participation has nearly reached its 2015 high of 310 insurers.
The individual market has continued its trajectory of increased participation by insurers, with 55 insurers entering the market in 2022.
Insurer offerings continue to increase
Over the past four years, product offerings have nearly tripled, with approximately half of that growth happening between 2021 and 2022 alone.
In-market growth represented about 50 percent of total product growth between 2021 and 2022, accounting for a larger share of total growth than during any of the previous four years, highlighting insurers’ strategy of competing on the number and variety of offerings in the market.
50% of 2021–22 growth driven by in-market growth
Insurer types generally increased their participation
Participation by number of insurers is approaching its 2015 peak and has increased for four years straight.
Tech-enabled and Medicaid plans, such as Oscar and Bright Health, have seen substantial growth since 2014, contributing the most to overall participation growth, while other types have declined or stayed relatively stagnant.
Conversely, participation among Consumer Operated and Oriented Plan (CO-OP) insurers has largely declined since 2016.
Tech-enabled and Medicaid plans have contributed the most to overall participation growth since 2014.
Growth in some plan types comes at the expense of others
Since 2014, participation of exclusive provider organization (EPO) plans has quadrupled to 36 percent as a share of all plan type offerings.
Preferred provider organization (PPO) plans have sharply declined by 36 percentage points in the same time frame.
Health maintenance organization (HMO) plans have grown steadily since 2014 as a share of plan types, displacing PPO offerings.
82% of all plan type offerings are managed-care plans.
Plan tier options are evolving
Silver and bronze plans account for the majority of market offerings in 2022, representing 75 percent of available options nationally.
Bronze plans have seen the most growth of any tier type since the creation of the market.
Catastrophic and platinum plans, conversely, have gradually become less available since 2014.
37% of 2022 plan type offerings are bronze, which have seen the most growth of any tier type.
Accessibility by insurer type
Blues have been the most accessible insurer type each year since 2014, with at least 80 percent of consumers consistently having such a plan available to them.
Medicaid and tech-enabled insurers have been narrowing the accessibility gap since around 2018, with about 75 percent and 50 percent of consumers, respectively, having access to such a plan in 2022.
CO-OP plans have precipitously become less available to consumers since 2017 as these insurers have reduced their participation in the market overall.
Consumer access has grown as newer, tech-enabled insurers bring greater choice to the market.
In 2022, fewer counties offered only one plan
Residents in many areas of the country that had access to just a single insurer in the individual market in 2018 (52 percent of counties) can now choose between multiple insurers.
Counties with high insurer participation (defined as more than five insurers) remain in the minority.
94% of counties have more than one insurer participating in the market.
Well more than half of consumers can choose from five or more plans
Counties with one participating insurer account for just 2 percent of the overall consumer population in 2022, down from one-quarter of consumers in 2018.
The proportion of consumers with access to five or more insurers jumped 17 percentage points from 44 percent in 2021 to 61 percent in 2022, indicating that the relatively few counties with such high participation levels still represent a majority of the market population.
61% of consumers in 2022 have access to five or more insurers.
Plans are becoming increasingly affordable
Largely stable or reduced gross premiums in 2022, combined with enhanced subsidies from the American Rescue Plan Act, suggest that many enrollees faced a meaningfully more predictable out-of-pocket cost burden than in prior years.
Gold plans in particular saw average price reductions in 2022—the largest reductions of any plan tier since the marketplace launched in 2014.
Also in 2022, platinum plans became less expensive for the first time, capping off years of decelerating price increases.
Premiums remained largely stable or saw reductions in 2022, and consumer cost burden was reduced by additional subsidies created by the American Rescue Plan Act.
Price changes varied by insurer type
Consumers in CO-OPs and Medicaid plans were most likely to see decreases in premiums (in the lowest-priced silver plan), while Blues consumers were most likely to see premium increases.
Enrollees in national plans were more than two times as likely to be exposed to premium increases of more than 7.5 percent (in the lowest-priced silver plan).
15% of enrollees in national plans were exposed to a significant increase (7.5 percent or more) in premiums.
Price changes by insurer type in 2022
CO-OPs experienced the most significant price decreases but have the lowest insurer presence in the market by far.
Tech-enabled plans offered substantial price decreases while also maintaining a meaningful presence in the market.
Blue and regional plans were the only plans with median price increases across the lowest-price silver plans.
3% price increase in Blues plans.
Consumers have access to increasingly affordable plans
In 2018, tech-enabled plans such as those carried by Bright Health, Friday Health Plans, and Oscar were the most affordable silver options for 1 percent of customers. That share rose to 20 percent in 2020 and 18 percent in 2022.
Blues and Medicaid account for 36 percent of participating insurers in 2022 and are most likely to offer the lowest-priced plan option.
The percentage of consumers whose most affordable silver plan option was offered by a national or CO-OP insurer dropped from 40 percent in 2015 to 6 percent in 2021 and 4 percent in 2022.
These shifts are driven partly by participation; 33 percent of insurers at the state level in 2015 were national or CO-OP, compared with only 15 percent in 2022.
Reinsurance improves on affordability
Annual premium growth for the median county’s lowest-priced silver plan was 5.2 percent in the 15 states with a section 1332 innovation waiver, compared with 8.3 percent in the 35 states plus Washington, DC, without one.
Annual premium growth of silver plans in the 15 states with reinsurance programs was observably lower than similar plans in the 35 states (plus Washington, DC) without programs, in most cases.
The findings in this document are based on publicly available information. The 2014–22 rates come from McKinsey’s Healthcare Insights exchange tracking tool, which includes county- and plan-level information from publicly available rate filings and from HealthCare.gov. The consumer population is defined as the population that has enrolled in any type of individual coverage, including both on- and off-exchange plans. Enrollment for 2022 is projected.
Because of data availability limitations, the analysis excludes some counties:
2020: Herkimer, Montgomery, Orleans, Saratoga, Schuyler, Tompkins, Washington, Wayne, and Wyoming counties in New York (combined estimated enrollment is 12,969)
2021: Chemung, Erie, Montgomery, Orleans, Saratoga, Washington, Wayne, and Wyoming counties in New York (combined estimated enrollment is 20,427)
2022: All New Mexico counties because their state-based exchange limits data scraping (combined estimated enrollment is 43,018); population not available for Kalawao County, Hawaii, in 2021 and 2022 (three estimated individual market enrollees in 2020)
Pricing: All analyses in this document are for exchange plans only; this report does not include off-exchange pricing data. For consistency, prices were obtained for a 27-year-old nonsmoking individual without family or partner coverage. To understand the premium changes that individuals face, we calculated the weighted average rate change in premiums in each relevant year for the lowest-priced silver plan in each rating area or county combination and combined those data with the distribution of individuals using individual market plans in each county, as designated by Federal Information Process Standards (FIPS) county codes.
Insurer participation: To calculate insurer participation counts, we analyzed the number of unique insurer parents that are offering plans on exchange, either by state or by county, depending on the analysis. To analyze access, we combined those data with the distribution of individuals using individual market plans in each county (designated by FIPS codes).
Plan types: Plan types reported here were taken directly from insurer rate filings and summary of benefits and coverage documents. Independent assessment of plan types was not part of the analysis presented in this document. Plan types are defined as follows:
HMO: A health maintenance organization typically centers around a primary-care physician who acts as gatekeeper to other services and referrals; it usually provides no coverage for out-of-network services, except in emergency or urgent-care situations.
EPO: An exclusive provider organization is similar to an HMO. It usually provides no coverage for any services delivered by out-of-network providers or facilities except in emergency or urgent-care situations; however, it generally does not require members to use a primary-care physician for in-network referrals.
PPO: A preferred provider organization typically allows members to see physicians and get services that are not part of a network, but out-of-network services often require a higher copayment.
POS: A point-of-service plan is a hybrid of an HMO and a PPO; it is an open-access model that may assign members to a primary-care physician and usually provides partial coverage for out-of-network services.
Insurer types are defined as follows:
Blue: A Blue Cross Blue Shield payer
Consumer Operated and Oriented Plan (CO-OP): A recipient of federal CO-OP grant funding that was not a commercial payer before 2014
Medicaid: An insurer that offered only Medicaid insurance prior to 2014
National: A commercial payer with a presence on exchanges
Provider: An insurer that also operates as a provider or health system
Regional or local: A commercial payer with a presence typically in a single state, but may be in multiple states
Tech-enabled: Any payer from the parent companies Bright Health, Friday Health Plans, or Oscar