ACA at 10 years: Insurer participation increases in 2023

Over the past 10 years the Affordable Care Act (ACA) has grown steadily. In the years since 2020 up until 2022, participation increased 25% to approximately 16 million. According to a McKinsey & Co. report – The Individual Health Insurance Market in 2023 – participation increased this year most in the national insurance carriers category.

Insurer participation increased in 2023 for the fifth consecutive year to 303 insurer participants at the state level, nearly matching the all-time high of 306 in 2015. Twenty-six new insurers entered at the state level in 2023 (a 9% increase in participation), compared with 48 and 35 new entrants in 2022 and 2021, respectively.

However growth in insurer participation has been driven both by insurers entering or re-entering the market as well as by existing insurers expanding their geographic footprint. “This slowed in 2023 because participating insurers have already entered most of the larger markets, and are shifting focus to in-market penetration,” says Brandon Flowers, partner. “Some of the larger insurtech plans also paused operations in select states or exited completely in 2023. Even with these dynamics, overall insurer participation increased in 2023 and consumer choice is near all-time highs, with national insurers driving geographic expansion in 2023 following re-entry into individual over the last two years.”

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

As of 2023, 59% of consumers have access to a plan from a national insurer, up from 47% in 2022.

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. This is unchanged from 2022 but up from 49% (an increase of 38%age points) since 2018.

“Increased insurer participation in the individual market is generally a positive as increased competition should improve affordability and increase choice for consumers,” adds Flowers. “The challenge that needs to be balanced is the risk that the number of available choices (across carriers and plans) becomes overwhelming to consumers. On average a consumer is choosing among 88 plans in 2023, compared to 27 in 2018.”

The report adds that although overall product offerings have increased substantially, this growth has not been consistent. In 2023, 82% of plans available to consumers are HMO (Health Maintenance Organization) or EPO plans that generally do not provide out-of-network coverage, with the proportion of HMOs relative to EPOs (Exclusive Provider Organization) increasing in 2023. In 2014, HMOs and EPOs represented a combined 42% of offerings, with the increase coming at the cost of PPO and POS offerings, which have declined from 58% in 2014 to 18% in 2023.

Flowers says the biggest numbers that stand out from the report is the expansion and improvement in price position for the nationals that have re-entered Individual. “More than 20% of consumers now see an insurer in this category as the lowest cost silver plan in their market, up from 6% in 2022. It will be interesting to monitor how this impacts enrollment and overall how the re-entry of these insurers impacts the competitive landscape over time.”