Most Americans who signed up for coverage on the federally run health insurance marketplaces had more choice of health plans in 2015 compared with the previous year, and the increased competition helped hold down the growth in premiums, according to a report released Thursday by federal officials.
In 2015, 86 percent of consumers could choose from plans offered by at least three insurers, up from 70 percent in 2014. Premiums increased an average of just 2 percent for one of the most popular types of plans between 2014 and 2015.
The report from the Health and Human Services Department is the most systematic analysis to date on competition in the marketplaces created under the Affordable Care Act.
It looked at the number of health insurance issuers and premiums between open enrollment periods for the 2014 and 2015 plan years in the 35 states that did not set up their own exchanges but used the federal government’s HealthCare.gov platform in both years.
According to the report, in 2015, most counties gained at least one new issuer, 33 percent held steady and 8 percent lost issuers.
Thursday’s report found that premium growth for the second-lowest-cost “silver” plan (known as the benchmark plan) in counties with at least one new issuer was 8.4 percentage points lower than in other counties.
Administration officials pointed to the latest data as a sign that the law is working to increase choice and competition for consumers, while keeping premium growth in check.
“This report shows that increased competition in a market, as occurred in most areas of the country in 2015, has an important impact on cost,” HHS Secretary Sylvia Mathews Burwell said.
In previous reports, administration officials have highlighted rising enrollment and the affordability of coverage. Enrollment data shows that 10.2 million people had signed up and paid premiums as of March. Of those, 6.4 million are receiving subsidies to help them pay for private insurance in the states that are relying on the federal marketplaces. The size of the subsidies depends on income. The average subsidy is $272 per month.
The new report does not provide any information about what experts and many consumers are most interested in knowing going forward: the final premium increases for 2016. Those figures are likely to be released later this summer. Some experts have said that proposed increases suggest that rates will skyrocket next year, but others have disagreed. Oregon recently approved a 25 percent rate increase for the largest plan in the state. And some insurers in other states also have proposed hefty increases.
Asked about the level of competition and rate increases for 2016, Richard Frank, HHS assistant secretary for planning and evaluation, told reporters in a press call that information that federal health officials have seen so far suggests that “the fundamentals look pretty good.” He added that “there will be competition” and noted that some analyses have shown that there will be “fairly modest premium growth.”
California’s exchange announced this week that average premiums will rise 4 percent statewide but will climb as much as 12.8 percent in Santa Cruz County. In parts of Southern California, like southwest Los Angeles, rates will increase by only 2.5 percent; that small rise partly reflects the fact that there is more competition among hospitals’ and doctors’ groups in Southern California than in Northern California, exchange officials said.
Rates are likely to vary drastically across the country, experts say. Each state has a different process for releasing rates, and analysts say they will not know the complete picture until closer to the next open-enrollment period, which begins in November.
Because consumers buying insurance on the exchanges tend to be very price-conscious, and subsidies are based on the second-lowest cost type of a popular plan in an area, there is considerable jockeying among insurers to offer one of the least expensive plans, experts say. Doing so can allow a new insurer into the market to grab market share quickly.
Although competition helps to drive down premiums, it can also be messy for consumers. “Because subsidies are based on the benchmark premium, consumers may have to change insurers to keep their out-of-pocket costs affordable when competitors are angling to be the low-cost plan,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation.