Advocates for Evidence-Based Health Policy Speakers
“I’m from the Government & I’m here to help”
Despite fears of failing Marketplaces, death spirals, and a recent threat by UnitedHealth to withdraw from the Marketplaces altogether, researchers find that insurer participation and Marketplace offerings increased between 2014 and 2015. The data also show that each additional insurer brings healthy competition to the Marketplaces which ultimately reduces premiums by 2% as insurers jockey to offer the lowest-priced plan. Insurers need to be encouraged to join the Marketplaces but the positive effects of a new entrant levels off after 2 to 3 health insurers enter a market.
Source: Kaiser Family Foundation (CC)Premiums increased across the board consistent with inflation and healthcare cost growth, but increases were much lower in counties where new insurers entered (1.5%) than in counties where number of insurers did not increase (5%). Sixty percent of all counties had new insurers participating. Nationwide, the average number of insurers per county increased from 3.6 to 5.2. The insurers participating slightly decreased the number of plans they offered from 15 to 12 per county, but the total number of plans available in each county still increased.
States using the federal marketplace had more new insurers than states operating their own Marketplaces, supporting the trend of states shutting down their independent Marketplaces and turning operations over to Healthcare.gov to allow more competition and lower premiums.
Marketplaces are a one-stop online health insurance exchange where insurers sell health insurance to individuals, who can compare all of the choices side by side. They are also the place where people earning 100-400% of the federal poverty level whose employers do not offer health insurance can check eligibility and obtain federal subsidies to help pay for health insurance. Healthcare.gov is the federal marketplace for the majority of states, while fifteen states and the District of Columbia operate their own state marketplaces.
For those folks wary of the federal government’s intrusion into healthcare, it looks like healthcare.gov is doing well to improve competition and improve prices for consumers.
commentary by Laura Medford-Davis
Abstract
Federal subsidies for health insurance premiums sold through the Marketplaces are tied to the cost of the benchmark plan, the second-lowest-cost silver plan. According to economic theory, the presence of more competitors should lead to lower premiums, implying smaller federal outlays for premium subsidies. The long-term impact of the Affordable Care Act on government spending will depend on the cost of these premium subsidies over time, with insurer participation and the level of competition likely to influence those costs. We studied insurer participation and premiums during the first two years of the Marketplaces. We found that the addition of a single insurer in a county was associated with a 1.2 percent lower premium for the average silver plan and a 3.5 percent lower premium for the benchmark plan in the federally run Marketplaces. We found that the effect of insurer entry was muted after two or three additional entrants. These findings suggest that increased insurer participation in the federally run Marketplaces reduces federal payments for premium subsidies. PMID: 26643622