ACA individual marketplaces finds growth of enrollment, modest increase in premiums, report finds

A new analysis by McKinsey finds that the individual health insurance market is seeing a period of growth of enrollment, while premiums have increased only moderately.

The report comes at a time of change as the country transitions out of the COVID pandemic and seeks to find a new normal in a range of health care areas. Over the past few years, Congress funded an expansion of Medicaid and aspects of the Affordable Care Act (ACA) — including extending more generous subsidies for those on the individual market. As the federal government ends the public health emergency enacted to address the pandemic, some Medicaid aid will be phased out this year, but the individual market subsidies will continue until 2025.

The new findings mark the 10-year anniversary of the launch of the individual marketplaces, the article notes. “The individual market has remained fluid during this time, with insurer participation, pricing, and plans changing from year to year. Consumer participation increased 25% to approximately 16 million from 2020 to 2022, coincident with extended enrollment periods and enhanced subsidies implemented under the American Rescue Plan Act of 2021 and extended through 2025 by the Inflation Reduction Act of 2022.”

Growth in 2022, continuing in 2023

The report’s authors wrote that participation in the exchanges has continue to grow since 2018, with growth continuing in 2023 but slowing slightly. Blue Cross and Blue Shield plans dominate the individual market, accounting for 42% of enrollees (down from 60% in 2014). Other national carriers account for 5% of enrollees, with state Medicaid plans making up 18% of the individual market. The report notes that Medicaid plans and eligibility will be reset in many states this year, with some of those enrollees likely to move to non-Medicaid ACA plans.

Insurtech, plans that represent innovative new models, usually featuring technology such as AI, has grown steadily since 2014. In 2021, it represented 22% of the individual market. However, the exit of one large carrier, Bright Health, resulted in a reduction in share for 2022, down to 18% of the market.

Provider-affiliated ACA plans made up 16% of the overall market in 2021, and regional plans and consumer-owned co-ops both represented single-digit shares, with regional/local ACA plans making up 5% in 2022 and co-ops representing 1% of enrollees.

Insurer participation also has been on the rise; increasing in 2023 for the fifth consecutive year. The study found that there were 303 insurer participants at the state level in 2023, nearly matching the all-time high of 306 in 2015. Participation hit its lowest point in 2016, with 181 carriers participating in the ACA individual market that year.

Modest increases in premiums, with more choices for consumers

Premiums across the different tiers of ACA plans (referred to platinum, gold, silver, bronze, and catastrophic — from highest levels of coverage to lowest), increased in 2023. “Gross premiums in 2023 increased across all metal tiers after four years of relative premium stability or declines,” the report says. “Platinum and catastrophic plans saw the highest rate increases in 2023, at 10% and 5%, respectively. Increases for gold plans were relatively modest at 2%.”

Related: ACA record enrollment: Too many patients, not enough doctors?

“Consumer access to multiple insurer options has increased along with insurer participation over the past five years, with 87% of consumers having access to three or more insurers in 2023,” the report says. “This is unchanged from 2022 but up from 49% (an increase of 38% points) since 2018. Just 4% of counties had access to only a single insurer in 2023, down from 52% in 2018.”

The authors note that, on average, ACA enrollees in the individual marketplace can choose among five insurers and 88 plans this year, compared with three insurers and 27 plans in 2018. They added that recent regulatory changes are likely to simplify the shopping process somewhat in coming years, resulting in fewer plan offerings.