Will insurance exchanges create more competitive marketplaces?

Competition begets competition--at least according to several healthcare economists. States that already have competitive insurance markets will likely see even more competition after health insurance exchanges open for enrollment later this year, they said.

That means insurers in states such as Colorado, Minnesota and Oregon, which all already boast robust competition, will be seeing an even more intense contest to enroll consumers, reported Stateline.

Rick Curtis, director of the Institute for Health Policy Solutions, believes that increased competition could arise from new insurers, including companies created by hospitals and large physician practices that can manage healthcare costs by carefully coordinating care they provide.

And Medicaid-only insurers may decide to sell plans on the exchanges, competing for the first time in the commercial market. In fact, up to 33 percent of the Association of Community Affiliated Plans' 58 nonprofit safety net insurers are expected to offer products on exchanges, Stateline noted.

But the flip side is also true--states with very little competition will likely see continued strong marketplace dominance by one or two insurers. "There are still going to be states with virtual monopolies," Linda Blumberg of the Urban Institute said, adding that the exchanges are unlikely to change that.

Since the American Medical Association found that 70 percent of commercial insurance markets are "highly concentrated," as FierceHealthPayer previously reported, an insurer like Blue Cross Blue Shield of Alabama, which covers 89 percent of the state's consumers, will probably continue its stronghold even after exchanges go live.

And in Wyoming, where Blue Cross Blue Shield of Wyoming already dominates, Insurance Commissioner Tom Hirsig says it's difficult for insurers to develop provider networks so they can enter the market. "My sense right now is that the individual market inside the exchange is not going to be stacked with lots of competition," he told Stateline.

To learn more:
- read the Stateline article