Aisling McDonough made a very good point last night:
People should be worried about bare ACA counties in 2019 b/c of GOP sabotage.
Between mandate repeal, short-term plans, health ministries, farm bureaus, etc, the guaranteed $ for the lone ACA insurer is getting smaller. It's not the same calculus as it was in 2017 & 2018.
— Aisling McDonough (@AislingMcDL) March 12, 2018
In 2017 and 2018, the calculus for insurers entering a bare county was that they would have monopoly pricing power which would allow them to choose their own risk pool. High premiums could cushion the risk of the insurer only getting the very sick non-subsidized people in a county while subsidies guaranteed that a reasonably healthy mixture could be attracted below 400% Federal Poverty Level (FPL). There were non-ACA outlets for people but they were fairly restrictive in the health sharing ministries, three month limited duration plans or non-coverage with mandate penalties.
I was never too worried about naked counties because of the logic above. A monopoly insurer should be able to print money as long as their actuaries were vaguely competent.
That might not be the case any more. The outflow channels to year long underwritten plans and no mandate penalty will unpredictably suck out a lot of the good risk in the bare county. The risk pool is going to be very sick for ACA plans. Rural counties are much more likely to have expensive provider contracts so the same person in a rural area will be much more expensive to treat than that person in an urban area where narrow networks are plausible. The big question is how much sicker will the ACA risk pool in potentially bare counties be?
Will they be 20% sicker? Will they be 50% more morbid? Will they be 100% more morbid? This is a huge risk to take for insurers. Some of the last counties to be covered last year had fewer than 1,000 covered lives in them. Insurers don’t like taking big risks for small upsides; it gives them hives. Walking away from bare counties is a viable business strategy especially as there is little political upside to making the ACA work.
Aisling is worried, therefore I am worried.