Dive Brief:
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Premiums for plans sold through the state health insurance exchanges are extremely varied, with insurer competition playing a key role in maintaining stability, HealthPayerIntelligence reported.
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In California, however; even with less competition, premiums have increased relatively slowly because its exchange relies on selective contracting with fewer plans and negotiates with insurers on premiums.
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The fostering of competition or use of selective contracting to contain premiums are timely considerations given the trend of insurer consolidation, which may be further propelled by the pending megamergers of Anthem with Cigna and Aetna with Humana, which would not only be massive in themselves but would further pressure other entities to scale upward.
Dive Insight:
Insurance market consolidation could have pros and cons for consumers. While improved efficiency could result in savings passed onto consumers, reduced competition could also bring bigger cost increases, according to findings from a study conducted by the Commonwealth Fund.
Hospital consolidation was also shown to be a factor, with premiums being higher in markets where there was reduced competition among hospitals.
In the face of those uncertainties, California's example indicates that selective contracting and direct premium negotiation could serve as effective policies to control premium growth, HealthPayerIntelligence suggested.