Jun 03 2013

Competition is Key: Early Report on Health Insurance Marketplace

The White House Blog on Thursday, May 30 released information and a memorandum that summarizes early information related to competition and choices available to those who will purchase health insurance through the Health Insurance Marketplace (the “Exchange”). The Exchange is scheduled to begin taking enrollment in October 2013 with coverage beginning on January 1, 2014. The Obama Administration reports that about 90% of “target enrollees” living in states with federally run exchanges and state run exchanges that have made their data publicly available will have a choice of at least five health insurers. Currently in most states, over 50% of the individual insurance market is dominated by one or two insurers. Wisconsin is one of five states where three or more companies cover over 50% of the individual insurance market. Whether competition among insurers will result in lower premium rates for individuals is still unconfirmed. There is promising news from California where exchange officials reported last week (May 23) that premiums for 2014 submitted from 13 different insurers ranged from 2% higher to 29% lower than the current average premium for small business plans in the largest metropolitan areas.

Wisconsin’s exchange will be operated by the federal government. Over 120 issuers have applied to offer health plans on the Exchange and many of these insurers are entering new markets with their individual insurance plans. Consumers will have multiple options in each tier of coverage: catastrophic, bronze, silver, gold, and platinum. On average, issuers plan to offer more than 15 qualified health plans per State, with some plans being offered only in part of rather than the entire State.

Preliminary data from Obama administration officials and state run exchanges provide some positive news, but it is still too early to know how well the Exchanges will function, how many individuals will use the Exchanges and purchase insurance and whether premiums will be lower than what is available today. There are still wrinkles to be ironed out in the next four months.