Dive Brief:
- Two new studies published in Health Affairs found evidence confirming the economic theory that increased competition in the ACA health insurance marketplaces typically results in lower plan premiums.
- One of the studies concludes its findings suggest increased insurer participation in the federally run marketplaces results in reduced federal outlay for premium subsidies.
- On the other hand, the other study notes, "This trend of low premium increases overall is unlikely to continue, however, as insurers are faced with mounting medical claims."
Dive Insight:
The first study of insurer competition during the ACA's first two years found the addition of an insurer in a county was associated with a 1.2% lower premium for the average silver plan, and a 3.5% lower premium for the benchmark plan in the federal marketplaces. It adds the effect faded after the addition of more than two or three competitors.
The researchers write the results "suggest that competition among insurers can have an economically meaningful effect" and "jockeying to be the lowest- or second lowest-cost plan is an important part of the mechanism of competition in the marketplaces."