GAO: Competition, Regulations Drive Smaller Providers From Obamacare Exchanges

A combination of government regulations and competitive pressures are causing many insurance providers to abandon the Obamacare exchanges for individuals and small businesses, according to a report released Monday by the Government Accountability Office.

In 2012, a small number of issuers of health coverage in the Obamacare exchanges accounted for a large majority of enrollments. There were an average of 42 issuers on the individual exchanges, for instance, but “only 4 had at least a 5 percent share of the market and they accounted for a combined 87 percent of that market.”

For the most part, “issuers with less than 5 percent of their 2012 market did not participate in the 2014 exchanges,” the report says, while most issuers with a share greater than 5 percent elected to continue participating in 2014.

To an extent, this likely reflects competition among providers driving the least successful companies from the market, but the GAO also identified a number of state and federal regulations that may have contributed to the decisions of some smaller issuers to leave the exchanges.