A new analysis by Washington, D.C.-based Urban Institute and the Robert Wood Johnson Foundation suggests health insurance exchanges will experience healthy competition, which is a key objective behind their implementation in the Patient Protection and Affordable Care Act.
The authors of the report reviewed legislation and conducted interviews in March and April 2013 in Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia about the state's efforts to develop exchanges. Specifically, the researchers assessed whether or not each states rules and regulations would promote or inhibit competition among insurers.
They found that the states were accommodating insurance companies and letting the market determine premium rates.
States expected that most commercial insurers and some Medicaid-only insurers would participate in the insurance exchange markets. It was unclear how competitive consumer operated and oriented plans might be and how multi-state insurance plans might factor into the insurance exchange markets.
There was also uncertainty about how new premiums would be set because of the new requirements for insurers, lack of information about the composition of health-plan enrollees and lack of information about what risks and risk adjustments in the new market will be.
Despite this, the report found that that the incentive for insurers to have the second-lowest cost plan in the market seemed to ensure that state insurance exchange markets will have strong competition and will offer reasonably priced premiums, lower premiums for unsubsidized enrollees and lower subsidy costs to the federal government.
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