Greater Insurer Competition Found To Lower Health Care Premiums

Although it is "reasonable" to think that U.S. residents can save money via "more competitive health insurance markets," there needs to be "enough competitors to reap the benefits," according to an analysis by the New York Times' "The Upshot."

"The Upshot" noted that a working paper by Jonathan Gruber of the Massachusetts Institute of Technology and Leemore Dafny and Christopher Ody of Northwestern University found that among partial or federally run insurance exchanges created under the Affordable Care Act:

• Premiums for the second-lowest cost silver exchange plan would have been 5.4% lower had UnitedHealthcare -- the largest health insurer in the U.S. -- sold plans through the exchanges;
• Premiums for the second-lowest cost silver exchange plan would have been 11% lower -- and would have saved the federal government $1.7 billion in federal premium subsidy costs -- had all health insurers who sold individual market plans in 2011 sold plans through exchanges in 2014; and
• Premiums for other types of plans would also have seen similar premium reductions from increased competition.

Meanwhile, other studies have shown that:

• Premiums were higher for the initial open enrollment period in less-competitive health insurance exchanges; and
• Competition has a larger effect on premiums -- by state and by marketplace -- in health insurance markets that have fewer insurers.

Dafny suggested several ideas for exchanges without much competition to attract additional insurers and further reduce prices, including:

• Allowing insurers to offer exchange plans on a trial basis before requiring them to satisfy all requirements set by state insurance departments; and
• Offering to spotlight new insurers' plans via search results, advertisements or automatic enrollment of some individuals (Frakt, "The Upshot," New York Times, 9/1).