But Chandler's prognosis suggests that insurers could face significantly different markets in different states. He and other observers worry that some carriers may flee the exchanges at least in some states in 2015, reducing competition and consumer choice and potentially driving up premiums. “If we all of a sudden have an exit of carriers, then we won't have an exchange marketplace,” said David Axene, a fellow of the Society of Actuaries. “I'm probably more concerned about that than I am about rates (increasing) out of control.”
Chandler said publicly traded insurers in particular will have to balance the public relations damage that could result from pulling out of the exchanges with demands from shareholders and investors to protect profits. “If things go as badly as they have started, I think some insurance companies are going to have to have a very tough discussion,” Chandler said.
The sharp difference in state markets so far is shown by the widely disparate enrollment figures released in recent weeks. In Texas, which defaulted to the federal exchange, fewer than 3,000 people signed up for exchange coverage in the first month, despite the fact that about a quarter of the state's non-elderly population is uninsured. By contrast, in Washington state, which has less than one-third the population of Texas but has a well-functioning state-run exchange, nearly 12,000 people had selected a private plan through the exchange as of Nov. 14.
With some notable exceptions such as Oregon, state-operated exchanges have functioned much more effectively than the federal online portal and consequently enrollments have been significantly higher.
Another difference between the states is in how competitive their exchange insurance market is. In New Hampshire and West Virginia, for example, only one company is selling plans through the exchanges. By contrast, in Oregon, Arizona, New Mexico and Colorado there are at least five firms competing for customers in every county. State and local markets with more competition generally have lower premiums.
John Holahan, a health insurance researcher at the Urban Institute, argued that these state differences are likely to grow as the rollout of the ACA continues. “The disparities are big and will get bigger,” he said. “The states that aren't cooperating (with the ACA) are the states with the biggest problems.”
Given the difficult launch of the exchanges, there are widespread concerns that insurers' actuarial and rate-setting assumptions about the individual market may prove erroneous. Those concerns have been heightened by President Barack Obama's recent decision to allow individual and small group plans that don't comply with the requirements of the ACA to be renewed through 2014, potentially reducing the number of healthier people moving into exchange plans.
“The one thing actuaries don't like is uncertainty and chaos,” Axene said.