We're experiencing another round of bad headlines for the Affordable Care Act (ACA) marketplaces. A government report found that, on average, premiums will rise 25 percent and consumers will have fewer insurance company choices in 2017. Eighty-three insurers will stop offering plans through the marketplaces next year while only 16 insurers will enter; 21 percent of enrollees will only have one insurer to choose from.
The ACA marketplaces aren't the only health insurance markets to have faced turmoil. As we document in a recent report for the Robert Wood Johnson Foundation, the Medicare Advantage (MA) markets were roiled with health plan exits in the late 1990s and early 2000s. Between 1998 and 2002, close to 50 percent of MA plans cancelled their contracts, causing between 300,000 and 1,000,000 Medicare beneficiaries annually to lose their private plans. Most were in rural areas. At the time, the exiting insurance companies explained that they just weren't making enough money in the MA market for it to be a viable line of business for them.
How government officials – primarily from the George W. Bush Administration and a Republican Congress – responded to that crisis could hold lessons for policymakers' response to developments in the ACA's marketplaces.
