How Competitive Are State Health Insurance
Markets?
October 14, 2011 - Kaiser Family Foundation
Beginning in 2014, state-based health
insurance exchanges will be created to facilitate coverage and
choice, with the hope that enhanced competition among insurers will
help to moderate premiums for individuals and small groups. This
analysis by the Foundation assesses the competitiveness of state
insurance markets for individuals and small businesses to establish
a baseline as implementation of the health reform law proceeds and
to provide context for the policy decisions states will be
considering.
The analysis finds that while substantial
variation exists in insurance market competition, a single insurer
dominated at least half of the individual market in 30 states and
the District of Columbia. In the small group market, a single
insurer accounted for at least half of the market share in 26 states
and D.C.
The analysis identified that the market share of
the largest plan in the small group market ranged from less than 24%
in Oregon and Pennsylvania to 96% in Alabama; in the individual
market, the market share held by one plan ranged from 21% in
Wisconsin to 86% in Alabama. The analysis also found that states in
the West generally had more competitive markets, while more rural
states in the upper Midwest and parts of the South and Mid-Atlantic
were generally less competitive. The level of competition in a state
was similar in the small group and individual markets, with a few
exceptions.