Study examines plans in Md., Calif., NC and others
Health insurance plans may not be as price competitive in some state exchanges as the Obama administration has touted, says research conducted by HealthPocket, a website that compares and ranks health care plans.
With so many larger health insurers opting to sell plans off the exchange instead of in the state marketplaces, the competition may not be robust enough to drive prices as low as some have anticipated. Large insurers absent from some government exchanges include UnitedHealthcare, Aetna, Cigna, Humana and Coventry (which is owned by Aetna).
HealthPocket examined 1,621 health plans across 10 states where insurers have publicly announced they would not participate in the state’s health insurance exchange, including California, Connecticut, Colorado, Georgia, Maryland, North Carolina, Oregon, South Carolina, South Dakota and Washington.
The company used U.S. Department of Health and Human Services insurance data to calculate the average 2013 monthly premium for a 35-year-old male nonsmoker for off-exchange insurers. This amount was then compared to the average premium for the rest of the insurers in the same state using the same applicant criteria.
In nine out of 10 states examined, insurers that plan to sell only outside of the exchanges currently average lower premiums than the other plans in their state. In fact, on average, the health plans not in the exchanges were 23% less costly than the remaining insurers in the state.
HealthPocket notes that if 2013 premium tendencies in the study continue for 2014, then consumers ineligible for subsidies must compare on-exchange and off-exchange plan prices to find the most affordable option.
HealthPocket predicts that those eligible for subsidies will be more inclined to shop on-exchange to find the best price as it would be particularly difficult for off-exchange plans to compete against on-exchange for those consumers with incomes less than 250% of the Federal Poverty Level, since not only do the on-exchange premiums receive subsidies for this group of consumers, but out-of-pocket healthcare costs are subsidized as well.
HealthPocket speculates that if 2013 premium trends documented in the study continue for 2014, it is probable that exchanges will have limited appeal to consumers ineligible for subsidies due to lack of competitiveness on the exchange. In this scenario, it notes, the on-exchange health plans will have its risk pool skewed toward subsidy-eligible consumers.