Iowa has Exchange problems. It has a single insurer, Medica, planning to be on-Exchange in 2018. Its prices are comparatively high which is mainly a problem off-Exchange. There are real problems in Iowa.
Yet Iowa is in a stable, sub-optimal equilibrium of a single carrier taking on all actuarial risk without taking on strategic competition risk.
Indianapolis has a different stable equilibrium. It has two Medicaid like carriers on the market in 2018. The broader network carriers that pay their providers near commercial rates are leaving. Indianapolis will see low prices on their Silver plans but comparatively high post-subsidy prices because the two Medicaid like carriers have effectively converged on minimally differentiated products with nearly identical pricing.
Robert Laszewski seems to imply that there are not stable, sub-optimal equilibriums and that the market design of the ACA is inherently flawed:
Or, Republicans could just let things in the individual health insurance market get worse and take that to the 2018 elections!
I have always believed that the market imperative to act is what would finally force Republicans to figure this out.
That said, there is no clear path out of this just as the individual markets continue to spiral downward partly because of the inherent issues in Obamacare’s market architecture and partly because of Republican efforts to make things even worse.
Assuming no sabotage, there are viable stable equilibriums that different regions can settle into. They are not optimal equilibriums of low cost, broad network, no hassle insurance that never says no to anyone. But they are fundamentally stable. Those sub-optimal equilibriums are either single carrier states or market convergence of very similar looking plans with different logos. States that more aggressively manage their exchanges can and do get better markets like California but even benign neglect leads to stability. The only question is whether the neglect is benign or active for most counties.
** Yes, rural counties with almost no covered lives will be a challenge as we see in Nevada and Ohio but these are corner cases not dominant cases.