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Insurance Exchange Functioning

By January 29, 2016Commentary

Everyone now acknowledges that the health insurance exchanges aren’t working out quite like planned.  Soon we may have some useful research on why that happened, but now we are still getting analyses revealing the depth of the problem, including one from the Brookings Institution that examined exchanges in six states.   (Brookings Analysis)   Here is what the authors found, based not just on looking at data but talking to stakeholders in each state.  In Alaska there are only two competitors on the exchange and premiums are high.  But Alaska is probably a special case, extremely rural and a low population and not much competition in the provider market.  As in other states, the interviewees also emphasized low consumer knowledge and high confusion.  In Florida there is a fair amount of competition in some areas, but premiums are high where there isn’t.  Stakeholders identified ability to negotiate with providers as a key to lower prices.  Kansas had relatively low premiums but expectations were for a 30% to 40% increase this year.  There is not a great deal of competition, basically only two insurers selling on the exchange, but provider prices may be low enough to constrain premiums.  North Carolina experienced low competition in the first year, but competition has grown, with insurers using narrower networks, tiered plans and provider risk-sharing to enhance their comfort with offering plans without losing their shirts.  But as elsewhere, rural areas tend to have no competition and high premiums.  Ohio had a number of health plan participants in most areas, but still had high premiums, which the stakeholders attributed to high provider pricing and little ability to negotiate.  Texas had adequate competition and somewhat lower premiums.  The common thread is a difficulty in attracting enough competition to all areas of a state, provider pricing and leverage that limits lowering of premiums, and low levels of consumer knowledge.

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