Lack of competition could hike costs in health insurance exchanges

June 5, 2012

(Medical Xpress) -- A new study from Washington University in St. Louis suggests that health insurance exchanges, a key provision of the Affordable Care Act passed in 2010, may need to be monitored to make sure there is sufficient competition between private insurance plans.

Exchanges are designed in the law to increase access to affordable for 50 million uninsured persons by offering among a broad array of private plans.

In the study, published in , Timothy McBride, PhD, professor and associate dean for public health at the Brown School at Washington University in St. Louis, and co-authors examined the insurance premiums, availability of plans and enrollment levels under the Federal Employees Health Benefits Program (FEHBP).

“From its inception, the health reform legislation used the structure of the FEHBP to guide the design of these exchanges,” McBride says.

The study concludes that to make certain that coverage sold through exchanges is affordable, policymakers may need to pay attention to areas where there is little plan competition.

“While the federal plans were widely available across the U.S. — especially with several national plans available everywhere — enrollment was concentrated in plans offered by a few organizations, especially Blue Cross/Blue Shield plans,” he says.

McBride found that 76 percent of current federal workers were in national plans, and 64 percent were in BC/BS plans nationwide. In addition, enrollment was more concentrated in rural areas, with 91 percent of federal workers in national plans and 78 percent in the Blue Cross/Blue Shield plans.

“Average bi-weekly premiums for an individual were lowest ($58.48) in counties where competition between insurance providers was extremely high, compared with areas of low competition ($65.13),” he says.

“This raises concerns about whether the competition will work in the exchanges as intended, everywhere in the country,” McBride says.

A possible solution to this, the study concludes, is to take steps through risk-adjustment policies or other measures to narrow differences in premiums and out-of-pocket expenses for consumers.

McBride and study co-authors Abigail R. Barker, Lisa M. Pollack and Leah Kemper, analysts from WUSTL, and Keith J. Mueller, PhD, professor of health management and policy at the University of Iowa, used data from the U.S. Office of Personnel Management for this study, produced through the Rural Policy Research Center for Policy Analysis.

Explore further: New insured numbers show tug-of-war between economy and health care reform

More information: To view the complete study visit: content.healthaffairs.org/cont … 18-9641-f0529074b547

Related Stories

New insured numbers show tug-of-war between economy and health care reform

September 14, 2011
The estimates of the population without health insurance in the United States remained unchanged in 2010, as compared to 2009, reflecting the counteracting effects of not only the sluggish economic recovery but also the preliminary ...

Few small employers likely to opt out of health reform rules

February 8, 2012
Rules that allow some small employers to avoid regulation under the federal Affordable Care Act are unlikely to have a major impact on the future cost of health insurance unless those rules are relaxed to allow more businesses ...

Complex choices in Medicare Advantage program may overwhelm seniors, study finds

August 18, 2011
In health care, more choice may not always lead to better choices, particularly for the elderly.

Consolidation of health plans may help lower hospital costs, study finds

September 8, 2011
Increased consolidation among health plans nationally may benefit consumers by lowering hospital prices, at least in those regions where health plans are the most consolidated, according to a new RAND Corporation study.

Half of Americans with individual health plans could gain better coverage under the ACA: report

May 23, 2012
More than half of Americans with individual market health insurance coverage in 2010 were enrolled in so-called "tin" plans, which provide less coverage than the lowest "bronze"-level plans in the Affordable Care Act, and ...

Recommended for you

Federal snack program does not yield expected impacts, researchers find

August 17, 2017
A well-intentioned government regulation designed to offer healthier options in school vending machines has failed to instill better snacking habits in a sample of schools in Appalachian Virginia, according to a study by ...

In a nutshell: Walnuts activate brain region involved in appetite control

August 17, 2017
Packed with nutrients linked to better health, walnuts are also thought to discourage overeating by promoting feelings of fullness. Now, in a new brain imaging study, researchers at Beth Israel Deaconess Medical Center (BIDMC) ...

Energy dense foods may increase cancer risk regardless of obesity status

August 17, 2017
Diet is believed to play a role in cancer risk. Current research shows that an estimated 30% of cancers could be prevented through nutritional modifications. While there is a proven link between obesity and certain types ...

Technology is changing Generation smartphone, and not always for the better

August 16, 2017
It's easy to imagine some graybeard long ago weighing in on how this new generation, with all its fancy wheels, missed out on the benefits of dragging stuff from place to place.

The environmental injustice of beauty

August 16, 2017
Women of color have higher levels of beauty-product-related chemicals in their bodies compared to white women, according to a commentary published today in the American Journal of Obstetrics and Gynecology. The authors say ...

Heavily used pesticide linked to breathing problems in farmworkers' children

August 15, 2017
Elemental sulfur, the most heavily used pesticide in California, may harm the respiratory health of children living near farms that use the pesticide, according to new research led by UC Berkeley.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.