By Kelly Kennedy, USA TODAY 5:10 p.m. EDT May 30, 2013
- About 90% of Americans will be able to pick from five or more insurers
- Early results show premiums lower than expected
WASHINGTON — New data collected by the Department of Health and Human Services show that about 90% of Americans buying individual insurance from state health insurance exchanges will have at least five companies to choose from when the exchanges start operations Oct. 1, according to a memorandum released by the White House Thursday.
In many states, the memorandum said, only one or two insurers have controlled the market for individual insurance policies, the type that people without employer-supplied health insurance have to buy.
The data are not surprising, said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, because insurers are doing all they can to provide a variety of plans at lower costs. In the states that have released plans and prices, such as Oregon and California, he said there are plenty of choices.
“I think that’s what we’re going to see across the country,” he said. “Competition is a good thing.”
According to the HHS statistics, which could change as states review the plans for approval, about 120 insurers have applied to operate plans through the exchanges. HHS found that 65% of new insurance entrants will be in states where one company dominates the market now.
The HHS examined data from 19 states with a federally run exchange and from other state marketplaces that have publicly released insurer information, the memo said. “Together, these states represent an estimated 80% of the 7 million people” the Congressional Budget Office said will buy insurance through the exchanges next year.
In the past, the insurance market has been essentially static as new customers tended to move into the market through their employers, rather than the individual market. Those with pre-existing conditions were often excluded from buying new plans.
As part of the 2010 health care law, the 7 million new customers give insurers an incentive to compete for that market, the memo said. Customers will easily be able to do a side-by-side comparison of costs and benefits in the online health exchanges.
Seventeen states and the District of Columbia have received HHS approval to create their own exchanges, and 15 states will work with HHS to run a marketplace, while the 19 remaining states will operate exchanges created for them by the federal government. Many states, particularly those with Republican legislatures and governors opposed to President Obama’s health care law, did not create exchanges.
States operating federally created exchanges will work with HHS to to ensure that insurers follow state and federal laws. Those states’ insurance commissioners will operate as they have in the past, Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, told USA TODAY in March.
Before the entry of new insurers into state markets this year, HHS statistics show, most states’ insurance markets were dominated by either one or two companies. In 2012, HHS found the following:
• In 11 states, the largest two insurers covered 85% or more of the individual market.
• In 29 states, one insurer covered more than 50% of enrollees in the individual market.
• In 45 states and the District of Columbia, two insurers covered more than half of enrollees.
Beginning in October, individuals will be able to do a side-by-side comparison of plans either through online state or federal exchanges. Insurers will not be able to charge more for or exclude those who have pre-existing conditions.
Insurers have submitted proposed pricing and plans, and, in the states that have released that data, there is a large variety of pricing. California’s premiums came in 50% lower than what had been projected, and in Washington and Oregon, people will pay less for premiums on the individual market than they did before the law, also called the Affordable Care Act.