Consumers who shop for health insurance plans in the newly formed public exchanges under the Patient Protection and Affordable Care Act will have a lot more options than they currently do — and it will likely result in a lower pricetag.
That’s according to new analysis from the Robert Wood Johnson Foundation, which compared insurers offering plans prior to national health reform with insurers applying to operate in state exchanges.
The analysis used data from 10 states that have released information on carriers that will operate in their insurance marketplaces — California, Colorado, Connecticut, the District of Columbia, Maryland, Massachusetts, Oregon, Rhode Island, Vermont and Washington.
Across the 10 states, the number of carriers offering nongroup insurance plans will increase 35 percent from 52 to 70 plans, the foundation said. Six of the 10 states will see more insurers operating on the nongroup exchange compared to the number of significant competitors pre-reform. Connecticut, the District of Columbia, Maryland and Vermont expect no change.
“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 nongroup market because it currently offers limited options and little information to guide consumer choice, and will therefore be substantially altered by PPACA. They say that because tax credits for individual coverage premiums require obtaining insurance through an exchange, most insurance companies committed to the nongroup market will choose to participate.
Though it’s early to tell how competition will develop in the states, researchers said early evidence is showing an increase in competition in most state-based exchanges.
Heather Howard, director of RWJF’s State Health Reform Assistance Network, called the "robust competition" in the states good news for consumers.
That's 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," Howard said.