Unpacking the State-Based Marketplaces
As policy makers debate the future of health care, the twelve state-based marketplaces (SBMs) and five state marketplaces using the federal platform (SBM-FPs) have proven themselves sustainable, solvent examples of how state flexibility can be leveraged to bridge public and private interests to improve lives and drive stable markets. As a result of these efforts, states operating SBMs and SBM-FPs have become leaders in promoting consumer choice, increasing enrollment, and making decisions for the health of their own markets.
As purchasers, many of the SBMs and SBM-FPs negotiate with issuers to ensure their marketplaces can offer products attractive to their target customers. Based on NASHP’s examination of initial filings, the majority of SBMs expect to retain stable issuer participation in their marketplaces in 2018. During this time, where federal policy uncertainty has raised questions over issuer participation, relationships between the SBMs and issuers has been especially pivotal to assure consumers will have access to a choice of products in the upcoming year. Together, issuers and SBMs are working to develop solutions and contingencies responsive to a potentially shifting environment.
Attracting and retaining consumers
SBMs and SBM-FPs are continually refining their marketplace strategies, developing new tools and methods to attract healthier, stable enrollees into their markets. During the 2016-2017 Open Enrollment Period, SBMs and SBM-FPs attracted 1,008,325 new consumers; about 71 percent of their total enrollees (2,457,567 individuals) were return customers (more details available on our chart). Research published by Covered California also found that SBMs, on average, boast a lower rate of attrition that the FFM, retaining 94 percent of total enrollment over OE3, compared to 85 percent (See Chart 1). Sustained retention is key to ensuring stability for issuers seeking consumers committed to a full year of coverage.
Maintaining a stable market
The efforts of SBMs, such as those described above, has encouraged the stabilization of insurance markets in recent years. Analysis of recent CMS data looking at the risk mix of enrolled populations indicates that SBMs and SBM-FPs attract a healthier risk mix into their marketplaces. Risk scores have continued to improve for the SBM and SBM-FP states since open enrollment; and in 2016, these states achieved a 7.7 percent lower risk score than states that use the FFM (See Chart 2). States’ success in maintaining market stability even in challenging times, reflects their “on the ground” knowledge of their customers, close working relationships with their insurance regulators and capacity to address changing policy and consumer needs.
SBM and SBM-FPs are full steam ahead on preparations to open enrollment on November 1, finalizing rate negotiations and operational changes to enable a successful opening. Throughout, NASHP will continue to monitor and report on their progress as the fifth open enrollment season approaches.
1 Chart 1: “New Federal Report Shows the Individual Markets Across the Nation Are Stable.” Covered California. July 6, 2017. Source
2 Available CMS data does not include Massachusetts, which operates its own risk adjustment program. Vermont is also not included from SBM calculations, due to the existence of a merged small group and individual insurance market in this state. Average risk score for Vermont’s merged market is reported as 1.55 in 2016.