kynectKentuckians who obtain health insurance through the state exchange can say goodbye to competition. In nearly half the counties, residents next year will have only one option on Kynect — Anthem — if they want health insurance through the Affordable Care Act.

That’s a big switch from this year, when Kentuckians in all counties could choose from at least two insurers, and most could choose from at least three.

Aetna, UnitedHealthcare and WellCare are abandoning the Kentucky market altogether, according to an analysis of data IL obtained from the Kentucky Department of Insurance.

Even so, a national health insurance specialist told IL that consumers should see little impact as companies enter and leave the exchange.

“Some carriers are clearly not succeeding … and they’re taking a pause,” said Kevin Lucia, a senior research fellow and project director at the Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute.

Big health insurance companies including Louisville-based Humana have said that they are struggling with higher-than-expected costs incurred by customers who sign up for insurance through the exchanges, which are a central part of the health care act, known informally as “Obamacare.”

In 54 counties next year, Kentuckians who want to get health insurance through the state exchange can buy plans from only one insurer. The graph on the far right indicates the number of counties with at least five insurers. Source: IL analysis of Kentucky Department of Insurance data. | Graphic by IL.

In 54 counties next year, Kentuckians who want to get health insurance through the state exchange can buy plans from only one insurer. The graph on the far right indicates the number of counties with at least five insurers. Source: IL analysis of Kentucky Department of Insurance data. | Graphic by IL.

The insurers have said that the premiums they have collected from those new customers have not been enough to cover their health care costs. (Humana said this month that its second-quarter profit fell 20 percent and that it expected to lose $208 million more this year on the exchange business than previously projected.)

As a result, some insurers are reducing the number states and counties in which they are offering plans. For example, Hartford, Conn.-based Aetna, which wants to buy Humana for $37 billion, said this month that it would offer plans in only 242 counties next year, down from 778 this year. The company had offered plans in eight Kentucky counties this year. Next year, it won’t offer exchange plans anywhere in Kentucky.

Humana will offer plans in only nine Kentucky counties next year — down from 15 this year.

HumanaHumana spokeswoman Kate Marx told IL via email that “a number of persistent issues” prevent the company from being able to offer affordable, high-quality and attractive individual insurance products.

And while those struggles have prompted the company to propose “a number of changes” for 2017, Marx said Humana has not released county-specific information.

The state told IL that the deadline to file plans for 2017 has passed and that insurers will not have any opportunity to introduce new plans for next year.

Dynamic situation

Kevin Lucia

Kevin Lucia

While those insurers are re-evaluating how to participate, others are succeeding and expanding their offerings, Lucia said. Meanwhile, state and federal government agencies are taking steps to entice more insurers to participate in the exchanges, such as:

  • Altering the periods during which people can sign up for insurance.
  • Tweaking the risk adjustment mechanism, which redistributes funds from plans with lower-risk enrollees to plans with higher-risk enrollees.

“You have a lot happening at once,” Lucia said. “Basically, it’s every carrier is having a different experience.”

For example, Baptist Health and CareSource are expanding their footprint in Kentucky — but not nearly enough to offset the departures of the other insurers.

Other states are seeing similar developments. The Tennessee Department of Commerce and Insurance told IL that the number of counties in which Tennesseans have just one option on the state exchange is rising from zero this year to 57 next year — similar to Kentucky’s trajectory from zero to 54.

The data prompted Tennessee’s top insurance regulator to tell The Tennessean newspaper that the state exchange was “very near collapse.”

The Kentucky Cabinet for Health and Family Services told IL that insurers, because of their ACA-related losses, “are left with the choice of increasing rates, reducing benefits or pulling out of the exchange markets altogether.”

The cabinet would not tell IL how it would describe the health — or frailty — of Kentucky’s exchange and would not say what, if any, steps it was taking to entice additional insurers to offer policies. The governor’s office could not be reached.

National trend

Courtesy of Kaiser Family Foundation.

Courtesy of Kaiser Family Foundation.

The declining number of options in Kentucky and Tennessee reflect a national trend: A recent analysis by the Kaiser Family Foundation showed that the number of states in which customers will have access to plans from only one insurer will rise to five next year from one this year.

The foundation said that nine additional states will have “significantly more” single-insurer counties next year. That list of nine includes Tennessee — though not Kentucky.

The foundation also said that the share of exchange customers who have access to plans from at least three insurers is falling to 62 percent next year from 85 percent this year. Meanwhile, the share of customers who have access to plans from only one insurer is spiking to 19 percent from 2 percent.

Lucia said the lack of options in Kentucky means that many consumers will not get a benefit from the competition that the health care act intended to create — but Kentuckians still will see a number of plan options — even if from the same insurer — and those who receive federal subsidies will see little to no higher out-of-pocket costs.

With many dynamics, Lucia said the ebb and flow of the offerings are not a surprise given the complexity of the market and the changes brought on by the health care act.

Before the ACA, he said, many insurers made money by discriminating against sick people. Now, insurers have to make money with a diverse pool of customers, including some with very high risks for health services, and some are still figuring out how to properly price their policies.

“It’s a totally different situation,” Lucia said. “We are just at the beginning,” he said of the health care act. “This is a marathon.”