Patient Protection and Affordable Care Act: Concentration, Plan Availability and Premiums, and Enrollee Experiences in Health Insurance Markets Since 2014
Published: 2017-01-31T00:00:00

Fast Facts:
The Patient Protection and Affordable Care Act changed many aspects of the private health insurance markets, including establishing health insurance exchanges in each state beginning in 2014—intended to allow consumers to compare and select health plans.
In this testimony, we discuss our prior work that found:
enrollment in health plans was concentrated among a small number of health insurance issuers;
consumers in the individual market had access to more plans in 2015 than 2014, with varying premiums; and
enrollees who obtained exchange coverage were generally satisfied with their plans, with affordability still a concern for some.

Highlights:
section_title: Why GAO Did This Study
paragraphs: PPACA contained provisions, many of which took effect in 2014, that could affect how issuers determine health insurance coverage and premiums and how they market their plans. For example, PPACA prohibits issuers from denying coverage or varying premiums based on consumer health status or gender. PPACA also requires health plans to generally be marketed based on metal tiers (bronze, silver, gold, and platinum), which allows consumers to compare the relative value of each plan. It also required the establishment of health insurance exchanges in each state, through which consumers can compare and select from among participating health plans.
This testimony describes (1) private health-insurance market concentration and issuer participation from 2011 through 2014, the year by which key PPACA provisions took effect, (2) health plans and premiums available to individuals in 2014 and 2015, and (3) the experience of enrollees that obtained coverage through the exchanges from 2014 through 2016. It is based on three GAO reports issued in 2015 and 2016. For these reports, GAO examined data from the Centers for Medicare & Medicaid Services (CMS); reviewed published research; and interviewed stakeholders, including experts and officials from CMS and five states—Colorado, Indiana, Montana, North Carolina, and Vermont—that varied in geography and whether the state or CMS offered the exchange.
section_title: What GAO Found
paragraphs: GAO issued three reports in 2015 and 2016 on the early impact of the Patient Protection and Affordable Care Act (PPACA) on private health insurance markets.
Market Concentration
In a 2016 report, GAO examined enrollment in private health-insurance plans in the years leading up to and through 2014, the first year of the exchanges established by PPACA, and found that in all years analyzed, markets were concentrated among a small number of issuers in most states.
Beginning in 2014, enrollment in PPACA exchange plans was generally more concentrated among a few issuers than was true for the overall markets.
Plan Availability and Premiums
In a 2015 report, GAO examined the availability of health plans for individual market consumers and found that they generally had access to more health plans in 2015 than in 2014.
In both years, most consumers in 28 states for which GAO had sufficiently reliable data had 6 or more plans from which to choose in three of the four health plan metal tiers (bronze, silver, and gold).
The range of premiums available to consumers varied considerably by state, and in most states the costs for the minimum and median premiums for silver plans increased from 2014 to 2015. In both years, the lowest cost plans were typically available on an exchange.
More recent analyses by the Department of Health and Human Services found that in 2017 all consumers continued to have multiple plan options, and that premiums for exchange plans increased more in 2017 compared to the annual increases for these plans since 2014.
Enrollee Experiences
In a 2016 report, GAO examined national survey data to examine satisfaction of exchange enrollees. GAO found that, from 2014 through 2016, most enrollees who obtained their coverage through an exchange reported being satisfied overall with their plans.
In 2015 and 2016, the satisfaction that exchange enrollees reported with their plans was either somewhat lower than or similar to that of enrollees in employer-sponsored plans.
Exchange enrollees reported varying degrees of satisfaction with specific aspects of their plans, including coverage and plan affordability.
Stakeholders GAO interviewed and literature GAO reviewed revealed some concerns about exchange enrollee experiences that were generally consistent with longstanding concerns in the private health insurance market—including concerns about affordability of out-of-pocket expenses and difficulties understanding coverage terminology.

section_title: Letter
paragraphs: I am pleased to be here today to discuss findings of several recent GAO  reports on the effects of the Patient Protection and Affordable Care Act  (PPACA) on health insurance markets, including insurer availability,  variation in premiums, and enrollee satisfaction.
According to the most recently available Census Bureau estimates, over  189 million Americans under the age of 65 obtained health coverage from  private health insurance plans in 2015.  Private health insurance is sold  through individual and group markets. Group market participants  generally obtain health insurance coverage through a group health plan,  usually offered by an employer—small employers purchase insurance  from the small-group market and large employers purchase from the  large-group market.  Americans without access to group health  coverage, such as those with employers that do not offer health  coverage, may choose to purchase it directly from an insurer through the  individual market. All three markets (individual, small-group, and large- group) have historically been highly concentrated—that is, a small  number of issuers in a market enrolled a significant portion of the people  in that market.
As you know, PPACA contained a number of provisions that could affect  private health insurance markets, many of which took effect for plan years  beginning in 2014. For example, it changed how insurers determine  health insurance coverage and premiums and how they market their  plans, such as by prohibiting insurers from denying coverage to  individuals and from varying premiums based on consumer health status  or gender and established limits on premium variation based on age,  geographic location, and other factors. In addition, PPACA established  requirements for the benefits that must be covered by health plans— referred to as essential health benefits—and required insurers to market  their plans according to defined categories based on the extent to which  the plans would be expected to cover the costs of enrollees’ medical care.
PPACA also required the establishment of health insurance exchanges in  each state beginning in 2014—marketplaces through which consumers  can compare and select health insurance coverage from among all the  health plans participating in the state exchange. These plans are known  as qualified health plans (QHP). Some states have established their own  exchanges—referred to as state-based exchanges. In states that have  not done so, consumers have access to a federally facilitated exchange  (FFE). For 2017, 17 states were operating a state-based exchange and  34 states were using the FFE. In general, plans available on either type of  exchange are also available for sale outside of the exchange, in that the  consumer could work directly with an insurer to purchase a plan without  using their state’s exchange. However, PPACA provided incentives for  many consumers to use the exchange instead of purchasing plans  directly from an insurer. For example, certain consumers are eligible for  tax credits to help them pay their premiums, but only if they purchase a  QHP through the exchange. In addition, the exchanges are required to  carry out certain consumer assistance functions that may facilitate  individuals’ selection of and enrollment in exchange coverage. The  combination of all of these provisions allows consumers to use the  exchanges to directly compare the health insurance plans available to  them based on premium costs, benefits covered, and plan generosity.   According to the Department of Health and Human Services (HHS),  enrollments in the exchanges have increased every year since 2014, with  about 11 million individuals having purchased health plans through the  exchanges in 2016, up from about 7 million in 2014.
This testimony describes (1) private health-insurance market  concentration and issuer participation in the individual, small-group, and  large-group markets from 2011 through 2014, the years leading up to and  through the first year that key PPACA provisions took effect; (2) the  numbers of health plans and ranges of health plan premiums available to  individuals during the first 2 years of exchange operation (2014 and  2015); and (3) enrollee experiences with QHPs obtained through the  exchanges during the first 3 years of exchange operation (2014 through  2016).
My comments are primarily based on three reports we issued in 2015 and  2016. For these reports, we primarily examined data from the Centers for  Medicare & Medicaid Services (CMS), within HHS, and previously  published research. For our 2016 report on private health-insurance  market concentration and issuer participation, we analyzed data from  2011 through 2014, the first year of PPACA exchanges, to see how  market concentration and issuer participation in 2014 compared to earlier  years. We used 2011 through 2014 Medical Loss Ratio datasets and  2014 Unified Rate Review data that issuers are required to report  annually to CMS. For our 2015 report on the numbers of health plans and  ranges of health plan premiums available to individuals in 2014 and 2015,  we also analyzed data from CMS. Comparisons across years were  conducted at both the state and the county level for states that had  sufficiently reliable data in both years—including comparisons of plans  offered either on or off an exchange in 28 states (1,886 counties), and  comparisons of plans offered only on an exchange for 38 states (2,613  counties). For our 2016 report on enrollee experiences with QHPs  obtained through the exchanges during the first years of exchange  operation, we performed a search of research databases to identify  relevant literature published from January 1, 2014, through April 30, 2016.  Among other things, we identified and reviewed the results of five national  surveys of QHP enrollees who obtained their coverage through the  exchanges. We interviewed stakeholders, including officials from CMS  and five states—Colorado, Indiana, Montana, North Carolina, and  Vermont—that varied geographically and by whether the state or CMS offered the exchange. Each report includes a full description of our scope  and methodology. For the purpose of this testimony, we also present  more recent data on issuer participation, plan availability, and premium  options in the exchanges that were published by HHS in 2016.
We conducted the work upon which this statement is based in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: PPACA required the establishment of individual health insurance  exchanges, as well as small business exchanges, within each state by  2014. PPACA does not require issuers to offer plans through these  exchanges, but instead generally relies on market incentives to  encourage issuer participation. Issuers seeking to offer a health plan in an  individual exchange or small business exchange must first have that plan  approved by the exchange in the state. We previously reported that most  of the largest issuers holding the majority of the market in the 2012  individual and small-group markets participated in the 2014 exchanges,  although most of the numerous smaller issuers in those markets did not.  In addition, some issuers that participated in the 2014 individual or small  business exchanges had not participated in that respective market in  2012. While some of these issuers had previously provided coverage in  other markets in 2012, other issuers were newly established through the  federally supported Consumer Oriented and Operated Plans (CO-OP)  program.
As I mentioned above, PPACA also changed, as of 2014, how insurers  determine health insurance premiums and how consumers shop for  health insurance plans. As part of this, PPACA required that health plans  be marketed based on information that helps consumers compare the  relative value of each plan. Specifically, plans must be marketed by  specific categories—including four “metal” tiers of coverage (bronze,  silver, gold, and platinum)—that reflect out-of-pocket costs that may be  incurred by an enrollee. These changes occurred at the same time that  PPACA required the establishment of health insurance exchanges for  each state, through which consumers could compare and select from  among QHPs. Finally, beginning January 1, 2014, premium tax credits  and cost-sharing subsidies became available under PPACA for qualified  individuals who purchased QHPs sold through an exchange.
section_title: Health-Insurance Markets Remained Concentrated in Most States in 2014, While Issuer Participation Generally Decreased from the Prior Year
paragraphs: In 2016, we examined enrollment in private health-insurance plans in the  years leading up to and through 2014, the first year of the exchanges  established by PPACA, and found that in each year, markets were  concentrated among a small number of issuers in most states. On  average, in each state, 11 or more issuers participated in each of three  types of markets—individual, small group, and large group—from 2011  through 2014. However, in most states, the 3 largest issuers in each  market had at least an 80 percent share of the market during the period.  (See fig. 1.) Not all issuers in the individual and small group markets  participated in the exchanges in 2014, and several exchanges had fewer  than 3 participating issuers. Enrollment through the exchanges was  generally more concentrated among a few issuers than was true for the  individual and small group markets overall in 2014.
For our examination of issuer participation in the first year of the  exchanges, we reported that fewer issuers participated in most state  health insurance markets in 2014 compared to 2013, though exiting  issuers generally had small market shares in that prior year. Specifically,  we found that from 2013 to 2014, the number of issuers participating in  individual markets decreased in 46 states, while fewer states’ small-group  and large-group markets had decreased participation (28 and 22 states,  respectively). (See fig. 2.) However, across the three types of markets,  those issuers exiting each state market before 2014 generally had less  than 1 percent of the market in the prior year. There were also issuers  that newly entered state markets in 2014. Their market shares in 2014  varied across the three types of markets, with some newly entering  issuers in the individual market capturing a market share of over 10  percent. Most newly entering issuers in 2014 participated in the  exchanges and they generally had a larger share of the enrollment sold  through the exchanges than through the overall markets. In addition,  some newly entering issuers captured a majority of their exchange  market, with CO-OPs having a higher proportion.
Since 2014, there have been additional changes to the number of issuers  entering and exiting the individual and small group markets. For example,  most of the CO-OPs that offered coverage in the exchanges in 2014 have  since discontinued offering coverage. In addition, in an analysis of data  from exchanges in states that used the FFE and state-based exchanges,  where available, HHS has since reported that the number of issuers  offering health plans through the exchanges decreased from 2016 to  2017, reflecting multi-state withdrawals by a few large insurers.
section_title: Consumers in the Individual Market Had Access to More Plans in 2015 than 2014, with Varying Premiums in Both Years
paragraphs: In 2015, we reported that individual market consumers generally had  access to more health plans in 2015—a year after the initial  implementation of key PPACA provisions—than in 2014. Consumers in  most of the counties analyzed in the 28 states for which we had  sufficiently reliable data for plans offered either on or off an exchange had  six or more plans from which to choose in three of the four health plan  metal tiers (bronze, silver, and gold) in both 2014 and 2015. The  percentage of counties with six or more plans in those metal tiers  increased from 2014 to 2015. Specifically, in 2014, six or more bronze-,  silver-, and gold-tier plans were available to consumers in the individual  market (either on or off an exchange) in at least 95 percent of the 1,886  counties and were available on an exchange in at least 59 percent of the  2,613 of the counties for which we had sufficiently reliable data for plans  offered on an exchange. In 2015, the percentage of these same counties  with six or more bronze-, silver-, and gold-tier plans available in the  individual market increased to 100 percent, and at least 71 percent had  six or more of these plans available on an exchange. (See table 1.)
In our 2015 report, we also found that premiums varied among states and  counties, the lowest cost plans were typically available on an exchange,  and in most states premiums increased from 2014 to 2015. Specifically,  we found that:
The range of premiums available to consumers in 2014 and 2015  varied among the states and counties we analyzed. For example, in  Arizona, the premium for the lowest-cost silver plan option for a 30- year-old in 2015 was $147 per month, but in Maine, the lowest-cost  silver plan for a 30-year-old in 2015 was $237. We also found that the  range of premiums—from the lowest to highest cost—differed  considerably by state. For example, in Rhode Island, 2015 premiums  for silver plans available to a 30-year-old either on or off an exchange  ranged from a low of $217 per month to a high of $285 per month, a  difference of 32 percent. By contrast, in Arizona, 2015 premiums for  these plans ranged from a low of $147 per month to a high of $545  per month, a difference of 270 percent.
The lowest cost plans were typically available on an exchange.
Specifically, in both years, taking into account plans available through  an exchange and those only available off an exchange, the lowest  cost plans were available through an exchange in most of the 1,886  counties we analyzed in the 28 states.
In most states, the costs for the minimum and median premiums for  silver plans increased from 2014 to 2015. For example, in the 28  states included in our analysis, from 2014 to 2015 the minimum  premiums for silver plans available to a 30-year-old increased in 18  states, decreased in 9 states, and remained unchanged in 1 state. At  the county level, we found that premiums for the lowest cost silver  option available for a 30-year-old increased by 5 percent or more in  51 percent of the counties in the 28 states.
While our 2015 report examining the numbers of health plans and ranges  of health plan premiums available to individuals in 2014 and 2015 was  our most recent examination of these two issues, HHS has examined  more recent data. For example, in 2016, HHS reported that despite a  decline in the number of issuers participating in the FFE from 2016 to  2017, all consumers were able to choose among various plan options for  2017, although the options for about 21 percent of consumers were  among choices of plans offered by a single insurer. HHS also conducted  analyses focused on the premiums for the second-lowest cost silver plan  in states that used the FFE and estimated that average premiums for  these plans increased more between 2016 and 2017 (25 percent) than in  previous years (2 percent between 2014 and 2015, and 7 percent  between 2015 and 2016).
section_title: Available Data Show That Most Early QHP Enrollees Expressed Satisfaction with Their Plans in 2014 through 2016, Despite Some Concerns
paragraphs: In 2016, we reported that most enrollees who obtained their coverage  through the health insurance exchanges were satisfied overall with their  QHP during the first few years that exchanges operated, according to  national surveys of QHP enrollees. For example, most QHP enrollees  who obtained their coverage through the exchanges reported overall  satisfaction with their plans in 2014 through 2016, according to three  national surveys that asked this question. One survey found that most  2015 enrollees re-enrolled in 2016 with the same insurer, and often with  the same plan offered by that insurer, and another survey reported that  most re-enrollees expressed satisfaction with their QHP. The surveys  reported that QHP enrollees' satisfaction with their plans was either  somewhat lower than, or was similar to, that of those enrolled in  employer-sponsored health insurance in 2015 and 2016. To varying  degrees, QHP enrollees expressed satisfaction with specific aspects of  their plan, including their coverage and choice of providers, and with plan  affordability.
We also interviewed stakeholders—including experts, state departments  of insurance, and others—and reviewed literature for our 2016 report.  These interviews and the literature revealed some concerns about QHP  enrollee experiences that were similar to longstanding concerns in the  private health insurance market. For example, according to these experts,  some enrollees found it too expensive to pay for their out-of-pocket  expenses before reaching their deductibles and have reported concerns  about affording care or have been deterred from seeking care. Some  enrollees have also faced difficulties understanding their QHP's coverage  terminology and others have faced problems accessing care after  enrollment, according to stakeholders and literature we reviewed.
Chairman Jordan, Ranking Member Krishnamoorthi, and Members of the  Subcommittee, this concludes my statement. I look forward to answering  any questions that you may have.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For questions about this statement, please contact John E. Dicken at  (202) 512-7114 or dickenj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement.
Individuals making key contributions to this statement include John E.  Dicken, Director; Gerardine Brennan and William Hadley, Assistant  Directors; and Kristen J. Anderson, LaKendra Beard, Sandra George, and  Laurie Pachter.
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