New research suggests carrier monopolies are the primary driver of premium costs in states with federally facilitated Affordable Care Act (ACA) marketplaces.
The study, which was published in Health Affairs on Monday, considered three potential reasons for geographic variation in Marketplace premium costs: rating area health characteristics, providers’ ability to negotiate with insurers and competition among insurers.
The analysis concluded “the presence of a monopolist insurer was the strongest, and most precise, predictor of 2018 premiums in the individual markets.” Premiums were 50% higher in rating areas with one insurer—and 21% higher in areas with two insurers—compared to premiums in rating areas with three or more insurers.
Rating area characteristics and hospital market structure, on the other hand, were much less likely to predict premium prices.
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How? Odds are, the study says, “because competition from new entrants was unlikely.”
“One of the goals of the ACA was to foster competition among insurers in the hope of moderating premium growth in the Marketplaces. However, competition is no longer viable in many areas of the country,” Van Parys concluded. “Understanding how insurer competition has affected enrollment, costs and quality will help guide future Marketplace reforms.”
The extent to which monopolies will contribute to premium costs in 2019 is unclear. America’s Health Insurance Plans predicted double-digit premium hikes in May. A June report from Avalere Health anticipated higher premiums, but more plan options as well.
Meanwhile, Colorado recently reported its “smallest [price] increase in years,” Oscar Health plans to expand into three new states, and Bright Health added two new ACA markets.
As of Aug. 6, only 20 states had finished filing their rates for next year.