ACA UPDATE: Federal Health Exchanges Are Spurring Insurer Competition, In Former Monopoly (and Duopoly) Markets

Contrary to what the Republicans errantly forecast last election cycle, the HHS health exchanges are driving new choices for consumers in markets where little choice (and thus little price competition) ever appeared.

In point of fact, it seems the Republicans were the ones defending monopolist, and douopolist markets in these states -- see graphic at right.

True enough, this is Mr. Obama's spin on how the exchange roll-out is faring, but the fact is that there are now private 13 insurers competing in the individual market in California -- where previously there were effectively only two -- tells us Mr. Obama was right, and the Republicans were wrong.

I do think this memo puts to rest the idea that Obamacare is a government take-over of health care insurance and delivery: 

. . . .Consumers in the individual market have long had only limited – if any – choice among plans.

In 2012, the individual insurance market was dominated by one or two different insurance companies in most States.

For example:

 In 11 States, the largest two issuers cover 85% or more of the individual market.

 In 29 States, one insurer covered more than 50% of all enrollees in the individual insurance market.

 In 46 States (including DC), two insurers covered more than half of all enrollees (see map).

 Most of the people expected to enroll next year live in States with limited health insurance choices.

 An estimated 85% of the 7 million people that the Congressional Budget Office (CBO) projects will enroll in the Marketplace in 2014 live in the 46 States where currently two insurers cover more than half of all enrollees.

 Unlike the current market – where people are often locked into a health plan due to their pre-existing conditions – starting in 2014, anyone can switch plans and, through the Marketplace, shop based on price and the level of coverage that fits their budget and needs.

 In 11 States, the largest two issuers cover 85% or more of the individual market.

 In 29 States, one insurer covered more than 50% of all enrollees in the individual insurance market.

 In 46 States (including DC), two insurers covered more than half of all enrollees (see map).

 Most of the people expected to enroll next year live in States with limited health insurance choices.

 An estimated 85% of the 7 million people that the Congressional Budget Office (CBO) projects will enroll in the Marketplace in 2014 live in the 46 States where currently two insurers cover more than half of all enrollees.

 Unlike the current market – where people are often locked into a health plan due to their pre-existing conditions – starting in 2014, anyone can switch plans and, through the Marketplace, shop based on price and the level of coverage that fits their budget and needs.

 New Choices for Consumers:

 The Marketplace is attracting new insurance choices and increasing competition for consumers, especially in States where it is really needed.

 The majority of States will have new health insurance choices that are not available today. The insurance reforms, coupled with premium tax credits, and premium stabilization programs, have made the Marketplace an attractive option for new entrants.

 In about 75% of the States with an HHS-run Marketplace, at least one new insurance company intends to enter the market and plans to offer individual market coverage.

 One out of every four insurance companies proposing to offer coverage next year in the HHS-run Marketplace has newly entered the individual market.

 About 65% of new issuer entrants to the individual market in the HHS-run Marketplace will be in States where only one insurance company dominates the market today.

 Multi-State plans will be offered in at least 31 States nationwide in 2014, with coverage expanding to all 50 States and D.C. no later than 2017. OPM is currently reviewing over 200 proposed Multi-State qualified health plan options. This type of plan offers similar coverage across State lines, and helps promote choice and competition.

Strong Competition:

 About 90% of target enrollees will have five or more difference insurance company choices – based on data from the 19 States with a HHS-run Marketplace and from other State-run Marketplaces that have publicly released information about their submissions.Together, these States represent an estimated 80% of the 7 million people CBO estimates will enroll in the Marketplace in 2014.

 While the number of issuers may change, today, over 120 issuers have applied to offer qualified health plans in the HHS-run Marketplace.

 Consumers will have multiple options in each tier of coverage: catastrophic, bronze,silver, gold, and platinum. On average, issuers plan to offer more than 15 qualified health plans per State, with some plans being offered in part rather than all of the State. . . .

We will keep you posted, as ever.