The health insurance exchanges were meant to promote price competition in both the individual and small-group markets through greater price transparency. In a new study, researchers at the Kaiser Family Foundation acknowledge that enrollment on the exchanges will change, not only during this last month of open enrollment but also throughout the year as enrollees gain or lose eligibility, so it will be years before a conclusive evaluation can be made.
But to get a glimpse of the results to date, the four researchers examined preliminary insurance exchange enrollment data from seven states—California, Connecticut, Minnesota, Nevada, New York, Rhode Island and Washington—to determine how competition is changing in the individual market. They compared exchange enrollment data with market share statistics from each state's 2012 individual market before full implementation of the 2010 healthcare reform law.
Several insurers with low-cost silver options have gained significant market share because most enrollees are opting for silver plans on the exchanges, the research discovered. Some exchange insurers may have found a competitive edge by offering narrow networks that “have lower premiums but give enrollees fewer choices of providers,” the researchers wrote. Recent Kaiser Family Foundation polling shows that consumers who are either uninsured or buying their own insurance prefer a cheaper plan with a narrow network to one that offers a broader network but a higher premium.
Meanwhile, the researchers found that in Minnesota, where competition was much as it was before the ACA, and in Washington, where the individual market is now less competitive than it was before the law, exchange enrollment is distributed across plans much differently from the way it was before in the individual market. For example, in Washington, Regence—an insurer that previously had been a major player in the individual market—has picked up “very few” enrollees in the exchange. But if the company is still enrolling a significant amount of people outside the marketplace, the individual market as a whole could end up being more competitive than what the information from only the exchanges suggests.
“This suggests a more dynamic market than indicated by aggregate statistics alone,” the study noted, “and points to the potential for greater price competition in the future.”
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