The health insurance marketplaces created by the Affordable Care Act (ACA) were intended to broaden health insurance coverage by making it relatively easy for the uninsured, armed with income-related federal subsidies, to choose health plans that met their needs from an array of competing options. The further hope was that competition among health plans on the exchanges would lead to lower costs and higher value for consumers, because inefficient, low-value plans would lose out in the competitive market place. This study sought to understand the diverse experience in five states under the ACA in order to gain insights for improving competition in the private health insurance industry and the implementation of the ACA.

In spring 2016, the insurance marketplaces had been operating for nearly three full years. There were numerous press stories of plans' decisions to enter or leave selected states or market areas within states and to narrow provider networks by including fewer choices among hospitals, medical specialists, and other providers. There were also beginning to be stories of insurer requests for significant premium increases. However, there was no clear understanding of how common these practices were, nor how and why practices differed across carriers, markets, and state regulatory settings.

This project used the ACA Implementation Research Network to conduct field research in California, Michigan, Florida, North Carolina, and Texas. In each state, expert field researchers engaged directly with marketplace stakeholders, including insurance carriers, provider groups, state regulators, and consumer engagement organizations, to identify and understand their various decisions. This focus included an effort to understand why carriers choose to enter or exit markets and the barriers they faced, how provider networks were built, and how state regulatory decisions affected decision-making. Ultimately, it sought to find where and why certain markets are successful and competitive and how less competitive markets might be improved.

The study of five states was not intended to provide statistically meaningful generalizations about the functioning of the marketplace exchanges. Rather, it was intended to accomplish two other objectives. First, the study was designed to generate hypotheses about the development and evolution of the exchanges that might be tested with "harder" data from all the exchanges. Second, it sought to describe the potentially idiosyncratic nature of the marketplaces in each of the five states. Political and economic circumstances may differ substantially across markets. Policymakers and market participants need to appreciate the nuances of different local settings if programs are to be successful. What works in Michigan may not work in Texas and vice versa. Field research of this sort can give researchers and policymakers insight into how idiosyncratic local factors matter in practice.

In brief, our five states had four years of experience in the open enrollment periods from 2014 through 2017. The states array themselves in a continuum of apparent success in enhancing and maintaining competition among insurers. California and Michigan appear to have had success in nurturing insurer competition, in at least the urban areas of their states. Florida, North Carolina, and Texas were less successful. This divergence is recent, however. As recently as the 2015 and 2016 open enrollment periods, all of the states had what appeared to be promising, if not always robust, insurance competition. Large changes occurred in the run-up to the 2017 open enrollment period.

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