ACA Exchange Competitiveness in Florida

• Date: 01 September 2017
• Author: Patricia Born
• Published date: 01 September 2017
• DOI: http://doi.org/10.1111/rmir.12074

Risk Management and Insurance Review

C

2017 The Brookings Institution. Risk Management and Insurance Review C

2017 The American Risk

and Insurance Association, 2017, Vol. 20, No. 2, 189-210

DOI: 10.1111/rmir.12074

PERSPECTIVE

ACA EXCHANGE COMPETITIVENESS IN FLORIDA

Patricia Born

ABSTRACT

Florida chose not to develop its own marketplace and therefore hosts the fed-

erally facilitated marketplace, HealthCare.gov. While the state may have had

an opportunity to define rating areas, it defaulted to the county level, which

is the level at which agents and carriers are licensed to conduct business. This

resulted in 67 rating areas, which is significantly more than most other states.

South Carolina has 46 rating areas, and Texashas 26. All other states have fewer

than 20.

INTRODUCTION

Florida has achieved significant success in reducing the number of uninsuredindividuals

since the passage of the Affordable Care Act (ACA). The success of Florida’s exchange

to date can be traced to (1) a wide network of navigators providing consumer assistance

across the state, (2) at least one carrier with a long history of participation across the

state, and (3) carriers with experience in Medicaid.

This report describes the current health-care market landscape and highlights the im-

portance of these factors. A better understanding of the drivers of successful exchanges

will be especially important when considering future health insurance reforms in the

United States.

Repeal of the ACA would have significant consequences in Florida. Relaxing some of the

“details” could also cause more harm than good, especially those that further complicate

the adverse selection problems. Florida’s marketplace experience offers some lessons

going forward.

This article proceeds as follows. The next section presents background information

that is important for understanding how Florida compares to other states. The “New

Developments Entering the Fourth Open Enrollment Period” section presents new de-

velopments entering the fourth open enrollment period. The “Selection of Local Sites”

section describes the process for selecting the five sites for this study and the “Method-

ology” section describes the data collection methodology. The findings for each site are

described in the “Outcomes of Competition and Highlighted Findings for Each Site”

section and the final section concludes.

Patricia Born is the Midyette Eminent Scholar of Risk Management and Insurance at Florida

State University.She can be reached at pborn@business.fsu.edu.

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190 RISK MANAGEMENT AND INSURANCE REVIEW

STATE CONTEXT

Before evaluating the operation of the exchange in Florida, it is helpful to set the context.

Thus, this section of the article presents some key facts and describes features of the

health insurance market in Florida that are important for understanding the state’s

experience with the health insurance exchange and will be useful for comparing Florida’s

experience to that of other states. Table 1 presents some key facts to illustrate how the

health insurance exchange has been implemented in Florida.1The table includes key

health facts and relevant health policies.

Exchange Characteristics

Florida chose not to develop its own marketplace and therefore hosts the federally

facilitated marketplace, HealthCare.gov. While the state may have had an opportunity

to define rating areas, it defaulted to the county level, which is the level at which agents

and carriers are licensed to conduct business. This resulted in 67 rating areas, which is

significantly more than most other states. South Carolina has 46 rating areas, and Texas

has 26. All other states have fewer than 20.

Rates and rate changes are filed with and reviewed by the Florida Office of Insurance

Regulation (FLOIR), which has general authority over the exchange operations.

Health Insurance Climate

Individual policies are sold both on and off the state’s exchange. Blue Cross and Blue

Shield of Florida (BC&BC of Florida/Florida Blue) has been the dominant carrier in

Florida’s individual health insurance market, with over 5 million members across the

state. It was established over 70 years ago and is ranked highest in consumer satisfaction

among health insurers across the country (PRNewswire, 2016). It is the only carrier in

Florida that offers plans in all marketplace rating areas.

Table2 shows the total premiums and market share for Florida Blue and the other top 10

insurers for the period 2013–2015. Note that Health Options Inc. is a health maintenance

organization (HMO) affiliate of BC&BC of Florida. Also included in the table are 4

additional carriers that are known to participate on the exchange, but do not make the

top 10 for overall business in individual health insurance.

The individual insurance market is highly concentrated, with 83.8 percent of the pre-

miums written by the top five carriers. BC&BS of Florida grew significantly with the

implementation of the exchange and remains the major carrier in the individual market,

though premium data from 2015 indicate that its competitors may be gaining in market

share. Humana’s share of the market has risen from 1.1 to over 15 percent from 2013 to

2015.

Three insurance carriers were not operating in the individual market before the ex-

change: Coventry Health Care (acquired by Aetna in 2013), Molina Healthcare, and

Ambetter/Sunshine Health (now Celtic Insurance Co.). These carriers now account for

nearly 17 percent of premiums in the individual market. Coventry and Molina have a

strong presence on the health insurance exchange but not in every rating area.

1The statistics and facts in Table1 were obtained from the Kaiser Family Foundation (2017), Gabel

et al. (2016), Dorsey (2016), and Witters (2016).