Competition helps keep a lid on ACA plan premiums


Insurer competition is helping control premium prices for plans offered pursuant to the Affordable Care Act that are sold in many counties where the federal government runs marketplaces, Kaiser Health News reported. Premiums are often falling where newcomers have undercut prices of monopolist insurers for 2015, according to a KHN analysis of federal premium records in 34 states.

In places with at least one insurer entering the market next year, premiums for the cheapest silver plan are rising by an average of 1 percent; but where the number of insurers isn't changing, premiums are climbing 7 percent on average, KHN found.

Silver plans are popular because they offer mid-level premiums, annual deductibles between $1,500 and $5,000 and require insurers to pay an average of 70 percent of medical expenses, the article noted. In the federal marketplaces, the average county premium for the cheapest silver plan is rising 3 percent to $273. In some counties where a new carrier offers the cheapest silver plan, though, premiums that once averaged $284 are dropping by an average of 3 percent, the analysis found.

"As a direct result of those new players being part of the market, they displaced what had been the lowest-cost silver plan," Indiana insurance agent Brian Liechty told KHN. "So it changed the dynamics."

Many insurers took a toe-in-the-water approach to marketplace sales in 2014, waiting to see how much others were charging and how costly it would be to insure new customers, the article noted. Many companies that first held back are now jumping into the fray. United Healthcare, for instance, offered products in four marketplaces in 2014 but is selling plans in 23 states next year. Heather Kane, United's vice president for exchange strategy, said the insurer designed its new plans after reviewing the popularity of competitors' products. "Consumers voted for affordability," Kane told KHN.

However, many Americans who keep their current plans won't see reduced silver plan prices, since premiums are growing for many of 2014's cheapest offerings. Comparison shopping and willingness to switch health plans are necessary to get the best deals, as FierceHealthPayer reported.                        

For more:
- see the KHN article and plan prices data (.pdf)  

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