Pandemic, Market Stability Encourage Major Insurers to Expand ACA Footprints

by Leslie Small

Given that enrollment in the Affordable Care Act (ACA) exchanges has basically flatlined, one might not expect insurers to view the exchanges as a growth opportunity. But recent moves by some of the country's largest payers suggest otherwise.

Centene Corp. said on Sept. 11 that it will widen its ACA marketplace footprint by selling plans in "nearly 400 new counties" next year. The company will increase its presence in 13 of the states where it already sells plans, plus enter two new states: Michigan and New Mexico.

On Sept. 10, Cigna Corp. announced that it will be increasing its ACA exchange presence by "nearly 80 counties" next year, expanding its customer reach in that market by more than 50%. All told, Cigna will offer marketplace plans in 220 counties spanning 10 states.

In addition, UnitedHealth Group has so far announced it will expand to three new states in 2021: Maryland, Tennessee and Virginia. And startup insurer Oscar said on July 30 that it will increase its ACA marketplace presence for the fourth consecutive year in 2021, entering four new states.

As for what may be driving those moves, Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, observes that "there's been this kind of secular trend away from employer-sponsored insurance vs. various other government or quasi-government products — Medicaid, Medicare Advantage and the marketplace — and I think that carriers are seeing synergies between all those government markets and want to be in all of them."

The COVID-19 pandemic and its economic repercussions comprise another, more recent, catalyst for insurers' ACA exchange expansions, according to S&P Global Ratings analyst Deep Banerjee.

"This market has not been growing in terms of the number of people signing up each year — it's not drastically declining either, but you wouldn't look at this market and say all of a sudden it's a growth market," Banerjee says. "But because of unemployment, because of [commercial group enrollment] shrinking, this could become a growth option in the future."

While the economy is expected to eventually rebound, it makes sense for firms that stand to lose group-market members in the short term to follow those enrollees by investing in other market segments, Hempstead adds.

From Health Plan Weekly