NCPA - National Center for Policy Analysis

Consumers Have Less Choice in ACA Exchanges

January 5, 2015

Has the Affordable Care Act brought choice and competition to the American insurance market? Just the opposite. Alyene Senger, research associate at the Heritage Foundation, has analyzed the insurance offerings in the 2014 and 2015 Obamacare exchanges. While choice improved for 2015 compared to 2014, she says, there is still less choice for consumers than what existed prior to Obamacare.

Senger compared insurance competition at the state level in 2015 to 2013, the last year that the insurance market operated without the Obamacare exchanges. According to her research analyzing individual market carriers in all 50 states, the exchange in 2015 is 21.5 percent less competitive than the individual market was in 2013.

However, insurance plans are not always offered statewide, so looking at county-level data is also important, and it reveals a real lack of competition in the insurance market. There are 3,134 counties in the United States. According to Senger:

  • Consumers in one-third of those counties have just one or two insurers to choose from in 2015.
  • In 2015, 89 percent of American counties will have five or fewer companies selling insurance policies.
  • Fifty-seven percent of American counties in 2015 will have just three or fewer insurers (a decrease from 2014, when 78 percent of counties had three or fewer insurers).
  • Sixty-two percent of Texas counties have only one or two insurers offering coverage in 2015 on the exchange.
  • There is only one insurer offering health care coverage on West Virginia's exchange.

What does this mean for Americans? Even in the areas that offer multiple insurance carriers, consumer choice is limited, because the Affordable Care Act mandates that insurance plans meet specific standards. As Senger writes, "[T]hese rules largely standardize insurance plans." Moreover, mandating benefits raises the costs of insurance, and Americans can expect to pay higher premiums and deductibles compared to the pre-ACA market.

Source: Alyene Senger, "Measuring Choice and Competition in the Exchanges: Still Worse than Before the ACA," Heritage Foundation, December 22, 2014.


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