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Competition and Choice in the Health Insurance Marketplace Lowered Premiums in 2015

The Health Insurance Marketplace established by the Affordable Care Act allows consumers to compare health insurance plans based on key factors, such as covered services, providers, and importantly, price. According to a report released today, choice and competition increased in the 2015 Marketplace and consumers benefitted as new issuers entered and price competition intensified. In 2015, 86 percent of Marketplace-eligible consumers could choose from at least three issuers, up from 70 percent in 2014.

Counties with net increases in issuers had lower premium increases than other counties in 2015. Premium growth for the second-lowest cost silver plan in counties with at least one new issuer was 8.4 percentage points lower than in other counties. And for each new issuer that offered coverage, there was a 2.8 percentage point lower rate increase for the second-lowest cost silver plan from 2014 to 2015.

“Today’s study shows the Affordable Care Act is working to increase choice and competition for consumers and keep premium growth in check,” HHS Secretary Sylvia M. Burwell said. “This report shows that increased competition in a market, as occurred in most areas of the country in 2015, has an important impact on cost. That’s good news for the economy, and helps more people find quality affordable health coverage that meets their budget.

Today’s report examines changes in the number of health insurance issuers and premiums between open enrollment periods for the 2014 and 2015 plan years in the 35 states that used the HealthCare.gov platform in both years.

According to the report, in 2015, most counties gained at least one new issuer, 33 percent held steady and only 8 percent of counties experienced a net loss of issuers. New issuers entering a market might reduce premium growth, in part, because they offer plans at lower premiums, influencing incumbents to moderate their premiums.

The overall growth in second-lowest cost silver plan premiums between 2014 and 2015 was low, increasing by approximately 2 percent on average for potential enrollees. And premiums in counties with 3 or more issuers are more than 9% lower than in those with 1 or 2 issuers present. Previous work has also shown an inverse relationship between the number of issuers and premiums: on average, each additional issuer in a rating area is associated with a 4 percent lower second-lowest cost silver plan premium.

Open Enrollment for 2016 Marketplace plans begins on November 1, 2015. Visit HealthCare.gov to see if you qualify for a Special Enrollment Period for a life change like marriage, having a baby, or losing other coverage, or if you qualify for Medicaid or the Children’s Health Insurance Program.

To read today’s report visit: http://aspe.hhs.gov/health/reports/2015/MarketplaceCompetition/rpt_MarketplaceCompetition.pdf