Consumers in State Insurance Exchanges Will Have More Options Than Are Currently Offered in Those States

June 17, 2013 - Robert Wood Johnson Foundation

Princeton, N.J.—The number of insurers that offer nongroup plans to consumers this fall in state-run health insurance exchanges will be much greater than the current number, according to an analysis from the Robert Wood Johnson Foundation (RWJF). 

RWJF’s State Health Reform Assistance Network compared insurers offering plans prior to national health reform with insurers applying to operate in state exchanges. The analysis uses data from all 10 states that have released information on carriers that will operate in their insurance marketplaces.

Across the 10 states, the number of carriers offering nongroup insurance plans will increase substantially, from 52 to 70 plans—an increase of 35 percent. Six of the 10 states will see more insurers operating on the nongroup exchange compared to the number of significant competitors pre-reform. Four states expect no change.

“More carriers competing in a state means more choice for consumers. That increases pressure on insurers to reduce price and improve service,” said Andy Hyman, who leads health coverage programs at the Robert Wood Johnson Foundation. “This level of competition signals that the state exchanges will be vibrant marketplaces.”

Researchers focused on the nongroup market because it currently offers limited options and little information to guide consumer choice, and will therefore be substantially altered by the Affordable Care Act. They say that because tax credits for individual coverage premiums require obtaining insurance through an exchange, most insurance companies committed to the nongroup market will choose to participate.

Massachusetts is the only state for which the researchers have an indication of the long-term impact of reform on competition. In the seven years since the state implemented health reform, they say the number of competitors more than quadrupled and market share is now far more evenly distributed as well. The analysis says that in the year before reform (2005), Blue Cross Blue Shield of Massachusetts (BCBSM) dominated the nongroup market with an 80 percent market share. In 2013 it has less than 40 percent of nongroup enrollment. With re-structuring of the state’s exchange to comply with the ACA for 2014, five carriers are expected to have nearly as much, or more, nongroup enrollment as BCBSM.

“How competition will develop in the states is still evolving, but early evidence is showing an increase in competition in most state-based exchanges,” said Heather Howard, director of RWJF’s State Health Reform Assistance Network and a lecturer in public affairs at Princeton University. “The robust competition we’ll see in these states is good news for consumers, because companies have an incentive to provide high-quality, affordable plans through the state-based exchanges, and carriers are clearly interested in these new markets.”

The 10 states analyzed for the report are California, Colorado, Connecticut, District of Columbia, Maryland, Massachusetts, Oregon, Rhode Island, Vermont and Washington.

About the Robert Wood Johnson Foundation

The Robert Wood Johnson Foundation focuses on the pressing health and health care issues facing our country. As the nation’s largest philanthropy devoted exclusively to health and health care, the Foundation works with a diverse group of organizations and individuals to identify solutions and achieve comprehensive, measurable, and timely change. For more than 40 years the Foundation has brought experience, commitment, and a rigorous, balanced approach to the problems that affect the health and health care of those it serves. When it comes to helping Americans lead healthier lives and get the care they need, the Foundation expects to make a difference in your lifetime. Follow the Foundation on Twitter at www.rwjf.org/twitter or Facebook at www.rwjf.org/facebook.