New competition on public health insurance exchanges
Competition in the health insurance industry is changing.
According to a report by the McKinsey Center for U.S. Health System Reform, 28 percent of insurers participating in the exchanges are offering individual coverage for the first time; that is 16 percent of the 21,000 plans being sold on the exchanges (Modern Healthcare | Paul Demko).
States are seeing new competition that includes new market entrants. However, new entrants don’t account for all the changes in the insurance industry:
- Incumbent insurers are offering new plans with new (often narrow) networks
- Insurers who only offered Medicaid coverage are now participating in the individual market; allowing those who fluctuate between Medicaid and individual coverage to stay with the same carrier and perhaps keep their doctors
- Subsidiary companies are being developing by current health insurance incumbents, to offer exchange plans
- Entirely new competitors are entering the market, such as start-ups and co-ops
Despite the new competition, rural America is seeing limited participation by health insurance carriers and these less densely populated areas of the country, are seeing some of the highest health insurance premiums. “Of the roughly 2,500 counties served by the federal exchanges, more than half, or 58 percent, have plans offered by just one or two insurance carriers, according to an analysis by The Times of county-level data provided by the Department of Health and Human Services. In about 530 counties, only a single insurer is participating.” A lack of competition can mean higher premiums for these areas but new entrants have helped to add competition in some rural areas, especially new co-ops.
For example, in South Carolina, where there are only three participating carriers, a co-op, Consumers’ Choice Health Plan, gives consumers in the state another option, this is particularly true in many rural areas where only one other carrier is offering exchange plans. In Montana, the Montana Health co-op is also competing against two other carriers on the exchange, giving consumers more options.
According to the McKinsey report, new entrants are pricing plans competitively and “Co-op insurers in particular are offering lower-cost products. More than a third of the cheapest products sold through the exchanges were created by co-op insurers in the 22 states where such entities exist.”
Depending on how enrollment goes this year, we may see another shift in the exchange landscape in 2015, as exchange carriers may choose to leave the public health insurance marketplace or expand coverage to more states and companies who are sitting on the sidelines this year may decide to join in the competition.
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Jillian Carlile Research Analyst & Health Exchange know-it-all Strenuus firstname.lastname@example.org
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