The Affordable Care Act (ACA) was designed to make quality health coverage more affordable and accessible, in part by promoting competition among insurers in the law’s new marketplaces. By providing consumers with a portal through which to compare plans and obtain financial assistance with the cost of coverage, policymakers hoped the marketplaces would attract a large customer pool. Insurers seeking a share of that business would have to compete for it based on price and value. New research from CHIR faculty members finds that the ACA is achieving its goal of increasing competition among insurance companies as the second open enrollment period is underway in state-based marketplaces.
Compared with their individual market coverage options prior to reform, consumers in most states with their own marketplaces had a greater number of offerings to choose from in 2014, as more insurers entered these markets to sell plans though the new marketplaces. Some commercial insurers that sold group plans expanded into the individual market, and others entered the commercial market for the first time.
For the second year of open enrollment, nine states have more insurers selling in their marketplaces than last year, while five states and the District of Columbia saw no net change. Only two states faced a decline in the number of participating insurers, in each case, by a single carrier. There is a net increase of ten insurers competing to sell plans to consumers across all state-based marketplaces.
Though the number of plans offered in each state marketplace varies widely, research suggests that increased competition among insurers yields better outcomes for consumers. According to HHS, increased competition—measured by the number of issuers in a rating area—is associated with more affordable benchmark plans. In addition, HHS found that areas with more issuer competition tend to offer consumers more plan types (such as PPOs, HMOPs, and CO-OPs) that provide consumers with more options.
The fact that carriers continue to participate in state-based marketplaces in numbers roughly equal to—and often greater than—their level of involvement in the first year suggests industry participants view the marketplace model as viable. In their latest blog post for the Commonwealth Fund Sean Miskell, Kevin Lucia, and Justin Giovannelli share findings on insurer competition in state marketplaces. Read more here.