Consumers will have more choices for individual health plans than they do now when state-based health insurance exchanges open for enrollment in October, according to an analysis from the Robert Wood Johnson Foundation (RWJF). The increased competition may also drive down prices.
The number of carriers offering non-group insurance plans will jump to 70 plans from 52--a 35 percent increase--across the 10 states that have released information on insurers that will operate in their exchanges, RWJF's State Health Reform Assistance Network said in a recent news release. The group compared insurers offering plans prior to national health reform with those applying to operate in state exchanges.
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Six of the 10 states will see more insurers operating on the non-group exchange compared to the number of significant competitors pre-reform. For example, Massachusetts has increased the number of non-group insurers to nine from two and Oregon to 12 insurers from nine, the analysis showed.
Four states, including Connecticut and Maryland, expect no change. The other states involved in the analysis included Colorado, Rhode Island, Washington, Vermont and the District of Columbia.
More competition means not only more choices for consumers. "That increases pressure on insurers to reduce price and improve service," said Andy Hyman, who leads health coverage programs at RWJF, in the release.
The individual insurance market today offers limited options and little information to guide consumer choice. "This is the market that reformers consider to have been most dysfunctional and, therefore, is most radically altered by the Affordable Care Act (ACA)," said Jon Kingsdale, a director, and Jason Aurori, an analyst, at the Wakely Consulting Group in the report and who prepared the analysis for RWJF.
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Another way that the ACA will substantially change the non-group market is 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.
How competition will play out in most states is not known. "However, there is reason to expect that in states where competition is now hardy, reform will encourage it to grow more intense," Kingsdale and Aurori said.
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, the number of competitors more than quadrupled and market share is now far more evenly distributed as well.
According to the RWJF analysis, the year before reform (2005), Blue Cross Blue Shield of Massachusetts (BCBSM) dominated the non-group market with an 80 percent market share and Harvard Pilgrim Health Care with 15 percent. In 2013, BCBSM has less than 40 percent of non-group enrollment. Other insurers include Neighborhood Health Plan, Tufts Health Plan and BMC/HealthNet.
With re-structuring of the Massachusetts exchange to comply with the ACA for 2014, five insurers are expected to have nearly as much, or more, non-group enrollment as BCBSM, the release said.
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