Obamacare Didn’t Destroy Insurance Markets, but It Also Didn’t Fix Them

Most Americans get health insurance from a job or government program, but about 8 percent, or some 22 million people, now buy individual policies under the Affordable Care Act. Insurers began offering these plans in 2014.

Republican lawmakers and President Trump have criticized Obamacare, saying it took away people’s ability to choose their health plans and doctors, pointing to a recent exodus of insurers that could leave areas with a single insurer or none at all. Mr. Trump has insisted the markets are failing.

And the markets took another hit on Tuesday when Anthem, one of the nation’s largest insurers, pulled out of Ohio, leaving about 20 counties with no Obamacare carrier.

Supporters of the Affordable Care Act hoped the law would spur more competition among insurers across the country.

But so far, the law has not delivered on that promise, especially in states that never had much competition, but it didn’t create the lack of choice in those states, according to a Times analysis of insurer participation provided by the Robert Wood Johnson Foundation.

The data looks at state markets where all insurers must sell plans that meet Obamacare standards, regardless of how they’re purchased.

More than half of the 22 million people who buy their own insurance use Obamacare marketplaces, where most of them get a federal tax credit to help pay for coverage. The rest buy directly from an insurer or broker, and they do not get a tax credit.

In South Carolina, for example, only one insurer is selling through the marketplace, but there are four over all that offered Obamacare plans in 2017.

The total number of insurance companies now selling plans in the individual market is not that different from when Obamacare took effect in 2014.

One of the goals of Obamacare was to prevent the sale of “junk” insurance, which was much cheaper but wouldn’t pay more than a few thousand dollars in claims. So, initially, there was a sharp decline in carriers — nearly 200 of them left when the new law required insurers to offer comprehensive coverage.

A small surge followed in 2015, but companies have steadily left since. Most of the so-called co-ops created under the law to foster competition failed, and some of the largest insurers, like UnitedHealth Group and Aetna, also exited many of the markets after reporting that they lost hundreds of millions of dollars.

The continued struggle of some insurers to make money and the uncertainty over the future as Republicans talk of dismantling the law has led to defections of prominent insurers like Humana and Wellmark, a Blue Cross plan from Iowa, for 2018.

But the biggest drop in insurers is among those who sell plans exclusively on the Obamacare marketplaces.

Many companies — a third of the total — are choosing to sell outside the Obamacare marketplaces, where their customers are not eligible for federal subsidies.

One reason for that may be that people with higher incomes, who don’t need federal subsidies, tend to be healthier.

A new analysis by the Trump administration says the cost of insurance is higher now than before Obamacare. But the comparison does not include people who buy outside the Obamacare marketplaces, where premiums may be lower. It also does not reflect the lower premiums paid by a majority by people who receive federal tax credits.

Even before Obamacare, there have always been two distinct markets: states that still have plenty of competition and states that rely heavily on one or two insurers.

“It is remarkable how much of a connection there seems to be between a state’s current situation and their pre-A.C.A. environment,” said Katherine Hempstead, a policy expert at the Robert Wood Johnson Foundation, who recently wrote an analysis of the market.

In 15 states, eight or more insurers offer Obamacare plans. They are mostly the same ones where no single insurer had a dominant share of the market in 2013, before the law was enacted.

Big states like Pennsylvania and Texas, with major cities, have always appealed more to insurers because they offer a large pool of potential customers, and the companies can strike better deals with some of the hospitals and doctors. But states with more rural populations and poorer residents tend to struggle because insurers are reluctant to enter markets where there are fewer customers that may be costly to cover.

But the 19 states that currently have fewer than five carriers statewide are all ones where a single insurer had more than half of the overall market before Obamacare.

The largest insurer was typically a local Blue Cross plan, which offers coverage within a state and works closely with local hospitals and doctors.

In Alabama, Rhode Island and Vermont, the Blue Cross plan covered about nine out of every 10 people.

The local Blue Cross plan is often the remaining stalwart in states with little competition, especially in the Obamacare marketplaces, although there have been a few exits to date.

The Blue Cross plans “are carrying the exchange markets right now,” said Cynthia Cox, a policy expert at the Kaiser Family Foundation.