It has been eight years since the Affordable Care Act’s health insurance exchanges launched in 2014.
During that time, the individual market has been highly fluid, with insurer participation, pricing, and plan types evolving dynamically from year to year. The 2022 open-enrollment period (OEP) allows for an assessment of the latest movements in the individual health insurance market.
Several salient features have emerged, particularly in light of the substantive changes created by the American Rescue Plan Act of 2021. Using data scraped from nearly every health insurance exchange in the country, McKinsey’s Center for US Health System Reform has uncovered critical insights relevant to consumers, payers, providers, private equity sponsors, and policy analysts.
The Center for US Health System Reform’s analysis of the 2022 OEP led to the following conclusions:
- Insurer participation and new product offerings have accelerated in the past four years (the halfway point since the marketplace launched), with levels near or surpassing their all-time peaks.
- Managed-care plans—particularly health maintenance organization (HMO) plans and exclusive provider organization (EPO) plans—have grown steadily since 2014 and now account for 82 percent of plan type offerings.
- Consumers increasingly have access to more insurer choices and plans in their home counties; only about 2 percent of consumers have access to just one insurer.
- Across all plan tiers, prices (premiums) remained largely stable, with only slightly higher price increases in 2022 than in 2021; consumer cost burden was also reduced by additional subsidies created by the American Rescue Plan Act.
- Annual premium growth of plans in the 15 states with section 1332 innovation waivers was observably lower than similar plans in the 35 states plus Washington, DC, without waivers.
Overall, the individual market has continued its recent trajectory of increased participation by insurers and consumers. Pricing has largely stabilized in the past several years, and consumer access has grown as newer, tech-enabled insurers bring greater choice to the market.
But uncertainty remains, in part because the enhanced premium subsidies created by the American Rescue Plan Act are due to expire at the end of 2022. If Congress does not renew these subsidies, pricing and consumer participation may face headwinds in the 2023 OEP.
Methodology
The findings in this document are based on publicly available information. The 2014–22 rates come from McKinsey’s Healthcare Insights exchange tracking tool, which includes county- and plan-level information from publicly available rate filings and from HealthCare.gov. The consumer population is defined as the population that has enrolled in any type of individual coverage, including both on- and off-exchange plans. Enrollment for 2022 is projected.
Because of data availability limitations, the analysis excludes some counties:
- 2020: Herkimer, Montgomery, Orleans, Saratoga, Schuyler, Tompkins, Washington, Wayne, and Wyoming counties in New York (combined estimated enrollment is 12,969)
- 2021: Chemung, Erie, Montgomery, Orleans, Saratoga, Washington, Wayne, and Wyoming counties in New York (combined estimated enrollment is 20,427)
- 2022: All New Mexico counties because their state-based exchange limits data scraping (combined estimated enrollment is 43,018); population not available for Kalawao County, Hawaii, in 2021 and 2022 (three estimated individual market enrollees in 2020)
Pricing: All analyses in this document are for exchange plans only; this report does not include off-exchange pricing data. For consistency, prices were obtained for a 27-year-old nonsmoking individual without family or partner coverage. To understand the premium changes that individuals face, we calculated the weighted average rate change in premiums in each relevant year for the lowest-priced silver plan in each rating area or county combination and combined those data with the distribution of individuals using individual market plans in each county, as designated by Federal Information Process Standards (FIPS) county codes.
Insurer participation: To calculate insurer participation counts, we analyzed the number of unique insurer parents that are offering plans on exchange, either by state or by county, depending on the analysis. To analyze access, we combined those data with the distribution of individuals using individual market plans in each county (designated by FIPS codes).
Plan types: Plan types reported here were taken directly from insurer rate filings and summary of benefits and coverage documents. Independent assessment of plan types was not part of the analysis presented in this document. Plan types are defined as follows:
- HMO: A health maintenance organization typically centers around a primary-care physician who acts as gatekeeper to other services and referrals; it usually provides no coverage for out-of-network services, except in emergency or urgent-care situations.
- EPO: An exclusive provider organization is similar to an HMO. It usually provides no coverage for any services delivered by out-of-network providers or facilities except in emergency or urgent-care situations; however, it generally does not require members to use a primary-care physician for in-network referrals.
- PPO: A preferred provider organization typically allows members to see physicians and get services that are not part of a network, but out-of-network services often require a higher copayment.
- POS: A point-of-service plan is a hybrid of an HMO and a PPO; it is an open-access model that may assign members to a primary-care physician and usually provides partial coverage for out-of-network services.
Insurer types are defined as follows:
- Blue: A Blue Cross Blue Shield payer
- Consumer Operated and Oriented Plan (CO-OP): A recipient of federal CO-OP grant funding that was not a commercial payer before 2014
- Medicaid: An insurer that offered only Medicaid insurance prior to 2014
- National: A commercial payer with a presence on exchanges
- Provider: An insurer that also operates as a provider or health system
- Regional or local: A commercial payer with a presence typically in a single state, but may be in multiple states
- Tech-enabled: Any payer from the parent companies Bright Health, Friday Health Plans, or Oscar
