The less competitive a health insurance market is, the higher the premium rates are, according to a report funded by the Robert Wood Johnson Foundation.
The report authors analyzed the market competition and premium prices in 10 states. Alabama, Arkansas, Rhode Island and West Virginia had the least competitive markets. In each of these states, a Blue Cross Blue Shield plan dominates the market.
On the other hand, insurance markets in Colorado, Maryland, Massachusetts, New York, Oregon and Virginia were very competitive, particularly in urban areas. Because of that competition, insurers implemented different strategies, including narrow networks, to help lower costs and attract consumers.
Narrow networks can help insurers lower premium costs by either outright excluding expensive providers from their plans or sorting providers into tiers based on cost-efficiency and quality performance measures, FierceHealthPayer previously reported.
Other factors affecting the increased competition included Medicaid plans, which already have limited networks, and consumer oriented and operated plans (CO-OP), which offered very low premiums in some markets.
"Marketplace premiums in 2014 were affected by many factors, including competition among carriers and the development of narrow networks," Katherine Hempstead of the Robert Wood Johnson Foundation said in a statement emailed to FierceHealthPayer. "The new carrier entry into 2015 markets signals that competition will remain a factor. It remains to be seen what becomes of narrow networks in the face of potential pushback from providers, regulators and consumers."
To learn more:
- here's the report