The number of insurers that offer non-group plans to consumers this fall in state-run health insurance exchanges will be much greater than the current number, according to an analysis from the Robert Wood Johnson Foundation (RWJF).
RWJF’s State Health Reform Assistance Network compared insurers offering plans prior to national health reform with insurers applying to operate in state exchanges. The analysis uses data from all 10 states that have released information on carriers that will operate in their insurance marketplaces (California, Colorado, Connecticut,District of Columbia, Maryland, Massachusetts, Oregon, Rhode Island, Vermont, and Washington).
Across the 10 states, the number of carriers offering non-group insurance plans will increase substantially, from 52 to 70 plans–an increase of 35 percent. Six of the 10 states will see more insurers operating on the non-group exchange compared to the number of significant competitors pre-reform. Four states expect no change (see table above).
“More carriers competing in a state means more choice for consumers. That increases pressure on insurers to reduce price and improve service,” said Andy Hyman, who leads health coverage programs at the Robert Wood Johnson Foundation. “This level of competition signals that the state exchanges will be vibrant marketplaces.”
Researchers focused on the non-group market because it currently offers limited options and little information to guide consumer choice, and will therefore be substantially altered by the Affordable Care Act. They say that because tax credits for individual coverage premiums require obtaining insurance through an exchange, most insurance companies committed to the non-group market will choose to participate.
Massachusetts is the only state for which the researchers have an indication of the long-term impact of reform on competition. In the seven years since the state implemented health reform, they say the number of competitors more than quadrupled and market share is now far more evenly distributed as well. The analysis says that in the year before reform (2005), Blue Cross Blue Shield of Massachusetts (BCBSM) dominated the non-group market with an 80 percent market share. In 2013 it has less than 40 percent of non-group enrollment. With re-structuring of the state’s exchange to comply with the ACA for 2014, five carriers are expected to have nearly as much, or more, non-group enrollment as BCBSM.
“How competition will develop in the states is still evolving, but early evidence is showing an increase in competition in most state-based exchanges,” saidHeather Howard, director of RWJF’s State Health Reform Assistance Network and a lecturer in public affairs at Princeton University. “The robust competition we’ll see in these states is good news for consumers, because companies have an incentive to provide high-quality, affordable plans through the state-based exchanges, and carriers are clearly interested in these new markets.”