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February 2020

Center for US Health System Reform

Insights into the 2020 Individual market –increased consumer choice and decreased premiums

McKinsey & Company 2

Carrier Participation


1. Carrier participation increased in 2019 and 2020, following 3 years of decline1

Source: McKinsey Center for US Health System Reform analysis of federal and state individual marketplace data

Exchange participation by year

Count of carriers at the state level

Incumbent carriers Carrier exits New entrants

Note: New entrants includes carriers that newly filed individual exchange plans in a given state, as well as carriers that were already participating in a state, but filed plans under

additional and/or different set of entities

1. Carrier considered to exit due to acquisition; the acquiring carrier is participation on exchange, resulting in a net change in carriers to the state of 0

2014 '15

exits

'15

new

entrants

2015 2016 2017 2018 2019 2020

total

'16

exits

'16

new

entrants

'17

exits

'17

new

entrants

'18

exits

'18

new

entrants

'19

exits1

'19

new

entrants

'20

exits

'20

new

entrants

282 19

77 333 4931 315 90

10 235 49

8 194 1

25 218 127 245


2. Regional/local carriers are expanding participation more than other carrier types

Exchange participation by year and carrier type

Count of carriers

75 74 73 70 60 64 67

64 73 7562

51 54 58

3740 39

3739

5064

3236 37

3331

37

39

50

85 77

25

24

2514

2014 15 16 17 18

282

19

12

2020

333315

234

194

218

245

8

8


5

75

5

Blue Provider Regional/local Medicaid National CO-OP


3. Managed care plans (including HMO and EPO) are continuing to make up a higher percentage of individual marketplace offerings

Plan type trends by year

Percent of exchange plan offerings

8% 7% 9% 8% 8% 8%

50% 49%36%

27% 24% 19%16%

9%8%

12%

12% 19% 26%30%

33% 36%43%

52%49% 47% 48%

1816152014 17 19 2020

5%


POS PPO EPO HMO


4. Consumer access to most carrier types is increasing in 2020

Exchange participation by carrier type

Percent of consumers with access to plan1,2

97 97 95 93

8084

89

2934 37

4349

535855 57 57

49 48 49 4953

7175

27

9 11 14

36 38 3935

3036

52

32 34

17

5 3 3 3

20202014 1715 1816 19

12.7 12.2 11.8 11.4

Source: McKinsey Center for US Health System Reform analysis of federal and state individual marketplace data. Kaiser

Family Foundation.

1. Consumers defined as the population that has enrolled in any type of individual coverage, including both on-exchange and off-exchange plans; enrollment for 2020 is projected

2. Access defined as the carrier type offering at least 1 on-exchange silver plan in a given county

Blue NationalMedicaid Regional/LocalProvider CO-OP

8.0 11.6

Estimated individual market enrollment, millions

To be determined –

federal exchange data

steady


5. The proportion of counties with a single carrier decreased from 36% in 2019 to 25% in 2020

Exchange participation by county1

Count of carriers

2019 2020

1 participating carrier 2 participating carriers3-4 participating carriers 5+ participating carriers


1. For 2020, due to data limitations the analysis excludes 9 NY counties with an estimated 2020 enrollment of 10,932: Herkimer, Montgomery, Orleans, Saratoga, Schuyler,

Tompkins, Washington, Wayne, and Wyoming


6. ~9% of consumers have a single carrier offered in their county, and ~66% of consumers can choose from at least 3 carriers

Consumer choice of carriers

Percent of consumers with a given number of carrier options in their county1,2

32%

53%48%

22%15% 15%

26%

42%

36%38%

37%

35%44%

40%

20%

9% 12%

23%

26%

25%

25%

6%17%

25%16%

9%

172014 15

3%

16

2%

1918 2020


1. Consumers defined as the population that has enrolled in any type of individual coverage, including both on-exchange and off-exchange plans; enrollment for 2020 is projected

2. Counting carriers that offer at least 1 on-exchange silver plan at a parent company level

1 carrier 5+ carriers3-4 carriers2 carriers


Pricing


7. Premiums for all metal tiers except platinum declined1

Change in gross premium by metal tier and year

Median change in gross premium (before subsidies) of the lowest-price plan by metal tier

9

11

24

12

-1

-1

2014-2015

2015-2016

2016-2017

2017-2018

2018-2019

2019-2020

7

15

27

18

10

-2

-1

4

13

25

31

1

-1

5

15

32

12

-1

-1

11

23

22

18

2

3

Catastrophic Bronze Silver Gold Platinum


1. Premium changes may differ from CMS estimates due to differences in methodology including use of lowest cost plan rather than second lowest cost plan


8. Across all carrier types, except national, over half of consumers will see a decrease in the lowest silver plan offered

Change in lowest price silver plan premium by carrier type

Projected percentage of consumers1 experiencing a premium change from 2019-2020


1. Defined as the population that has enrolled in any type of individual coverage, including both on-exchange and off-exchange plans. For 2020, this is projected based on 2019 data

9% 7%13% 14%

40%

37% 30%27%

43%

19%

36% 51%50%

28%

33%

62%

16%8% 13%

32%

10%19%

ProviderMedicaidBlue Regional/local National CO-OP

0%

10%+ decrease 0-10% decrease 0-10% increase 10%+ increase

3%


9. Regional/local and CO-OP plans filed the largest premium decreases in 2020

Change in gross premium by carrier type

Median change in gross premium (before subsidies) of the lowest-price silver plan


Blue NationalProvider MedicaidRegional/local CO-OP

58 12 39 567 64

7%

12%

21%

28%

0%0%

5%

10%

21%

32%

6%

-5%

2%

8%

18%

28%

1%3%

5%

10%

36%38%

-1%

2%

-11%

-1%

6%

37%

1%

-1%

-9%

18%

31%

34%

7%

-8%

2014-2015 2015--2016 2016-2017 2017-2018 2018-2019 2019-2020 Number of carriers


10. Plans offered by Medicaid or regional/local carriers will be the lowest premium option for over 50% of consumers

Price leadership by carrier type

Percent of consumers1 with carrier offering lowest-priced silver plan2


14

21

26

197

10

14

18

2123

16 16

45

26

26

29 29

3324

178

10

5 711 25

312

2435 35 36

32

2014

5

15

2

16

3

17

42

18

31

19

31

2020

ProviderRegional/localMedicaid NationalBlue CO-OP

1. Defined as the population that has enrolled in any type of individual coverage, including both on-exchange and off-exchange plans. Enrollment for 2020 is projected

2. Denominator represents all consumers enrolled in individual coverage. Numerator represents consumers whose lowest-price on-exchange silver plan option was offered by a

given carrier type

These changes are driven by

an expansion of non-national

carrier plans into more counties

and the affordability of these

non-national carrier plans

The percentage of consumers

whose most affordable silver

plan option was offered by a

national carrier dropped from

26% in 2015 to 3% in 2020


11. Premium declines were greater in states with reinsurance programs

Change in median lowest price silver plan premium by state

Percent premium change from 2019-2020

Source: McKinsey Center for US Health System Reform analysis of federal and state individual marketplace data; Kaiser

Family Foundation - Tracking Section 1332 State Innovation Waivers

1. States with reinsurance programs that experienced premium increases from 2019-20 include NJ (11%), AK(2%) and RI (0.4%) ..

0-10% increase10% decrease 0-10% decrease 10%+ increase No significant change

Reinsurance program

9 of 12states with reinsurance

programs1 will see a decline

in the median lowest price

silver plan premium

Medium premium change for

states with reinsurance

programs was ~4%

decrease versus ~1%

increase for states without

such programs

Reinsurance program


Methodology

Findings in this document are based on publicly available

information. 2014 through 2020 rates come from the McKinsey

Exchange Offering Database, which includes county and plan

level information from publicly available rate filings and

healthcare.gov. The consumer population is defined as the

population that has enrolled in any type of individual coverage,

including both on-exchange and off-exchange plans. Enrollment

for 2020 is projected. For 2020, due to data limitations the

analysis excludes 9 NY counties with an estimated 2020

enrollment of 10,932: Herkimer, Montgomery, Orleans, Saratoga,

Schuyler, Tompkins, Washington, Wayne, and Wyoming

Pricing – All analyses in this document are for exchange plans

only; this report does not include off-exchange pricing data. To

understand the premium changes that individuals will face, we

calculated the weighted-average rate change in premiums

between 2019 and 2020 for the lowest-price silver plan in each

rating area/county combination. First, we established a

distribution of individuals using individual market plans in each

county (FIPs code). Next, we combined this population

distribution with data about 2019 and 2020 lowest-price silver

plan premiums. Finally, we used the 2019 and 2020 premiums

to calculate weighted-average rate changes for 50 states and

DC individually and collectively.

Carrier participation – To calculate the counts of carrier

participation, we analyzed the number of unique carrier names

that are offering plans on-exchange. In the case where a single

parent company offers plans under multiple carrier names, we

count each carrier separately. To calculate the consumer view

of carrier participation, we analyzed the number of unique parent

companies that are offering plans on-exchange, to be reflective

of what a consumer perceives

Plan types – Plan types reported here were taken directly from carrier

rate filings and Summary of Benefits and Coverage (SBC) documents.

Independent assessment of plan types was not part of the analysis

presented in this document. Plan types are defined as follows:

HMO: a health maintenance organization is a plan typically centered

around a primary care physician who acts as gatekeeper to other

services and referrals; it usually provides no coverage for out-of-

network services, except in emergency or urgent care situations

EPO: an exclusive provider organization is a plan similar to an HMO. It

usually provides no coverage for any services delivered by out of-

network providers or facilities except in emergency or urgent-care

situations; however, it generally does not require members to use a

primary care physician for in-network referrals

PPO: a preferred provider organization is a plan that typically allows

members to see physicians and get services that are not part of a

network, but out-of-network services often require a higher copayment

POS: a point-of-service plan is hybrid of an HMO and a PPO; it is an

open-access model that may assign members to a primary care

physician and usually provides partial coverage for out-of-network

services

Carrier types are defined as follows:

Blues: a Blue Cross Blue Shield payer

Consumer-operated-and-oriented plan (CO-OP): a recipient

of federal CO-OP grant funding that was not a commercial payer

before 2014

Medicaid: a carrier that offered only Medicaid insurance prior to 2014

National: a commercial payer with a presence on exchanges

Provider: a carrier that also operates as a provider/health system

Regional/local: a commercial payer with presence typically in a single

state, but may include multiple states

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