When more insurers participate in an individual state or regional market, premiums fall, according to an analysis of 2020 and 2021 data by the Urban Institute.
The national average benchmark premium in the Affordable Care Act markets is slightly lower for the third year in a row, up 1.7% in 2021. Meanwhile, employer-sponsored market premiums have increased during the same period. However, there is a state-by-state variation in this scheme: seven states have seen premiums decline by less than 6%, with 10 more states experiencing a double-digit decline from 10% to 34% in ACA markets. Researchers at the Urban Institute say the reduced premiums are a product of insurers crowding the ACA markets, increasing competition, and new reinsurance programs in states like Colorado and Pennsylvania.
The ACA markets had no problem attracting insurers after a rocky start that had many experts worried about whether the ACA would survive, said John Holahan, a fellow at the Urban Institute and one of the study’s authors. .
“I hope this provides outside information that markets are becoming more stable for insurers to come in and provide coverage,” he said.
Despite insurers such as Humana and Aetna leaving the market in 2017, Holahan said many recognize it presents a viable business opportunity, with insurers such as Centene and UnitedHealthcare entering the markets in a “big way”. “. Swan Health and Oscar have also broadened their footprint to participate in high levels of competition. But, getting these insurers out in rural areas has been difficult, he said. Many rural areas are dominated by insurers, such as Blue Cross Blue Shield, in states such as Oklahoma and North Carolina, making premiums relatively high.
In a ranking area with one or two participating insurers, researchers found benchmarks for $ 148 and $ 114 per month higher than markets with five or more insurers, respectively. Similarly, in an area with three or four participating insurers, the reference premiums were $ 45 per month higher than those in regions with five or more. Sixteen states have premiums below $ 400, and 10 states have premiums above $ 500. For example, New Hampshire’s 2021 premiums are $ 321 per month compared to Wyoming’s average rate of nearly $ 800 per month.
Medicaid insurers operating exclusively in the Medicaid managed care market prior to 2014 have also increased their participation in these markets, lowering premiums because of their experience creating low-cost provider networks.
Hospital consolidation was also an indicator of lower premiums, which greater local market power makes it more difficult for insurers to negotiate lower prices.
The Urban Institute has scrutinized for state policies such as Medicaid expansion and reinsurance programs to better isolate the effects of increased insurance competition, finding that these strategies are highly associated with lower premiums and lower premium growth. .
Expanded federal premium tax credits and access to subsidized insurance for those with incomes above 400% of the poverty level are projected to push insurers toward greater participation – they have been included in the U.S. House of Representatives. COVID-19 in a package entitled “The American Rescue Plan.” Earlier temporary subsidies in legislation have played a major role in improving ACA coverage to accessibility for middle- and low-income Americans. Researchers at the Urban Institute said more than 5 million additional people would sign up for market registration and reduce non-group premiums by 15% if Congress makes the subsidies permanent.