Choice and Affordability in the ACA’s Health Insurance Exchanges

In 2014, nearly 8 million U.S. residents signed up for private health insurance coverage through new marketplaces created under the Affordable Care Act (ACA). According to a Kaiser Family Foundation estimate, this enrollment represented about 28 percent of the potential marketplace enrollment nationally. Individual states, however, differed in the share of the eligible population that gained coverage in the first year. At the high end, Vermont enrolled 87 percent of residents who lacked coverage through an employer or through public insurance programs. California enrolled 43 percent, while, toward the low end, North and South Dakota signed up only 13 percent of the eligible population. Setting aside the reliability of the technology through which consumers purchase plans, the success of the state marketplaces requires that insurers offer consumers a variety of plans at prices the uninsured or underinsured can afford. This Policy Brief looks at how state decisions on geographic boundaries affect prices in the first year, particularly for individuals living in rural parts of the United States. These small markets may attract fewer insurers, leaving consumers with few plan options and higher prices.