McKinsey Sees 45% Drop in Insurtech ACA Exchange Participation
What You Need to Know
Blue Cross and Blue Shield carriers are available almost everywhere but have lost exchange user market share.
National carriers have expanded their footprint but attracted just 5% of the exchange users.
In 2022, insurtech plans had a 14% share of the exchange users.
Financial losses and tight capital led to a big decrease in insurance technology firms’ individual health insurance market footprint this year, according to Edith Chan and other analysts at McKinsey & Co.
The firms are selling health coverage through only 24 Affordable Care Act public exchange programs this year, down 45% from the 2022 total, the analysts report in a new look at ACA exchange enrollment trends.
But national insurers like Cigna, CVS Aetna and UnitedHealth are selling coverage through ACA public exchange programs in more states this year, and their footprint has expanded 28%, to 50 state exchange programs.
Blue Cross and Blue Shield carriers and provider-owned insurers increased their footprint by 4.2%, to 125, and the total number of exchange programs options increased 2%, to 303.
What It Means
ACA marketplace trends might hint at what’s happening to financial services intermediaries of all kinds; this might be a year when blue chip stock issuers and Main Street firms are outperforming the firms that have promised to change everything.
The ACA Exchanges
Congress created the ACA exchange when it passed the two laws that created the Affordable Care Act statutory package.
Moderate lawmakers included the exchange program to fend off advocates of a government-run health finance system, by trying to use premium tax credit subsidies, new underwriting rules and a federally funded, web-based supermarket for health insurance to lower the cost and improve the appeal of commercial health insurance.
The federal government’s HealthCare.gov runs ACA exchange programs, or “marketplaces,” for 33 states, and 17 states and the District of Columbia run their own exchange programs.
Technical glitches plagued ACA exchange programs when the programs opened for business for the 2014 coverage year, but the programs have since recovered.
Enrollment in ordinary ACA public exchange plans and a related type of plan, Basic Health Plans, increased to 16.3 million people in March, from 16.1 million a year earlier, and from 14.5 million in 2014.
The market capitalization value (or theoretical stock sale price) of eHealth, a private web-based health insurance supermarket, is now about $200 per customer relationship. That implies a total value of about $3 billion for the ACA exchange system.
