Insurers vying for Obamacare business signal healthy exchange markets

More insurers will compete for consumers' business on the exchanges during the second year of Obamacare enrollments.

The number of insurers selling products on the state and federal exchanges will increase by at least 25% for 2015, the CMS announced Tuesday. There will be 77 additional health plans participating in the 44 states for which data is currently available. In 36 of the 44 states, there will be at least one new insurer seeking customers through the government-run marketplaces.

“To me it shows that the ACA is alive and well and that somehow God didn't listen to the prayers from the critics,” said Uwe Reinhardt, a healthcare economist at Princeton University. “God seems biased in favor of the ACA.”

The CMS report looked at 36 states relying on the federal HealthCare.gov website for enrollments and eight states with their own exchanges. In the states using the federal exchange, there will be 57 additional carriers — a 30% increase. And in four of those states — New Hampshire, Indiana, Missouri and West Virginia — the number of health plans selling products will at least double. (Although in West Virginia, that merely means the participation is doubling from one to two insurers.)

Jon Kingsdale, who was the founding executive director of the Commonwealth Health Insurance Connector Authority in Massachusetts, said that his state didn't see as rapid an increase in competition from insurers when it launched in 2007. He also pointed out that New Hampshire has been trying to get more competition in the individual insurance market for years without luck. This year, the state had just one insurer competing for customers, but next year there will be five health plans on the exchange.

In nine states the number of insurers will remain the same. California is the only state that will see a reduction in competition, with the number of companies dropping from 12 to 10.

Last week, PreferredOne, which captured nearly 60% of the exchange market in Minnesota, announced that it wouldn't participate in the government-run marketplace for 2015. That prompted concerns about what will happen to customers who enrolled in the company's plans this year.

But the data from the CMS suggests that PreferredOne will be an outlier. Just 14 plans that did business in the exchanges in 2014 won't be back for the next open-enrollment period, which begins Nov. 15.

UnitedHealthcare, the country's largest insurer in terms of lives covered, is significantly ramping up its exchange participation for 2015. The company plans to compete in two dozen exchanges, more than doubling its participation.

“There's probably no better sign of whether these markets have a long term future than the level of competition” among health insurers, said Joel Ario, a former director of HHS' Office of Health Insurance Exchanges who's now a managing director at Manatt Health Solutions. “I think they're the best judges of that.”

Paul Demko writes for Modern Healthcare, a sister publication of Business Insurance.