Health insurers choose the counties where they sell plans on the Affordable Care Act (ACA) Marketplaces. As a result, many people find they have fewer health insurance options than their neighbors in the next county, a new LDI study found. 

The paper is the first to show the extent to which Federally Facilitated Marketplace insurers exclude some counties while serving others in a rating area. These rating areas—which often comprise multiple counties—define where insurers must offer the same premiums for health plans.

“About one-third of the potential consumers of ACA Marketplace insurance did not have access to plans offered in a nearby county,” said LDI Senior Fellow Hanming Fang, a study coauthor. 

Fang and coauthor Ami Ko found that counties excluded from plan offerings tended to have fewer potential customers and overall poorer health. Without competition, insurance premiums tend to be higher, Fang said, adding to health insurance cost concerns as Marketplace subsidies are set to expire by the end of the year.

Why Health Insurers Exclude Counties—and What Happened in 2018

The ACA requires insurers to offer the same prices in a rating area, but the law does not require them to offer plans in each county. Fang and Ko found that about one in five counties lacked the same health plan options as other counties in a rating area. 

The study used data from the Centers for Medicare & Medicaid Services (CMS) for the 33 to 39 states that used the Federally Facilitated Marketplace from 2016 to 2022. The results did not include states with their own insurance marketplaces. 

The researchers asked whether anticompetitive behavior explained the restricted insurance offerings. “We were concerned that insurance companies engaged in tacit collusion,” Fang said, “dividing the market to avoid competition and increase their profits at the expense of consumers.”

To test for collusion, for each year of the study, the researchers compared insurers for county participation. Positive correlations indicated that two companies both sold plans in a county and did not avoid competition. Negative correlations showed that if one company sold in a county, the comparison company did not, suggesting that insurers engaged in anticompetitive behavior by dividing the markets. 

In six of the seven study years, the researchers found that county participation was positively correlated, suggesting that insurance companies did not engage in anticompetitive behavior.  The exception was 2018, which showed significantly negative correlations.

An explanation for 2018, Fang said, begins with the launch of the Health Insurance Marketplace in 2013, which saw great turnover in insurer participation. The churn began stabilizing in 2018, which had the lowest number of insurers in the study—averaging 1.7 per county, compared to 3.5 in 2016. Thus, in 2018, a few company leaders likely knew who their competitors would be, making it easier to tacitly cooperate and divide the market. This situation may have encouraged insurers to withdraw from offering plans in some counties, remaining in those with expected higher profits. 

Possible reasons for the return back to anticompetitive behavior following 2018, Fang said, include the loss of consumer incentives to buy insurance following the elimination of the ACA penalty for uninsurance, and the removal of cost-sharing subsidies to insurance companies that helped reduce enrollees’ out-of-pocket costs.

Even when insurers do not cooperate to divide the market, they may avoid selling plans in counties where their costs are expected to be high. A common expense for insurers is building a sufficiently large provider network that meets the ACA’s network adequacy standards. Supporting this hypothesis, Fang and Ko showed that insurers often sold plans in counties where they already had an adequate provider network for Medicare Advantage plans.

Preventing Anticompetitive Behavior With Regulatory Changes

The researchers concluded that, when conditions support it, insurers will tacitly collude to divide the market, limiting consumer choices. Although the study covered the Federally Facilitated Marketplace, Fang said collusion could also affect state-based marketplaces. Regulators should watch for anticompetitive conditions, he said, such as a small number of insurers competing in multiple markets. 

The study showed that insurers avoided selling in the same counties, which tend to have few residents and poor overall health. Forcing insurers to sell in these counties will push insurers to leave a rating area, Fang said. Instead, regulators can reduce expected costs of counties by relaxing the requirements for an adequate provider network. In addition, revising rating areas to group counties with similar population health outcomes and expected coverage costs might encourage insurers to offer plans more broadly. 

Fang is now studying how increased insurance coverage due to the ACA affects clinicians’ decisions about where to practice, in work supported by an LDI grant.

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The study, “Partial Rating Area Offering and Tests for Anticompetitive Market Segmentation in the ACA Marketplaces” was published on November 6, 2025 in the Journal of Health Economics. Authors include Hanming Fang and Ami Ko.

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