Aug. 7, 2018
Dive
Brief:
- Insurance
premiums in Affordable Care Act marketplaces with local payer monopolies
were 50% higher than premiums where more than two insurers were present,
a new analysis in Health Affairs finds.
- Fueling
the difference were big premium hikes for the monopolist
insurers' lowest-cost plans — $100, on average, in markets where
they had not offered the lowest-cost silver plan, and $116 in markets
where they had. Nearly 70% of silver plan premium increases in highly
consolidated markets between 2016 and 2018 were due to monopolist payers
raising premium prices on their existing low-cost plans.
- Understanding how competition
affects health plan enrollment, costs and quality could influence future
policy and reforms in the individual marketplace, according to the study.
Dive
Insight:
Ups
and downs in premium rates are often attributed to fluctuations in a
marketplace's risk pool. While an increase in numbers of sicker beneficiaries
can impact premiums, this study suggests insurer consolidation also plays a
role.
"Because
most enrollees select low-cost plans, the monopolist's pricing results in
higher costs for the government, because its subsidies are linked to the
second-lowest-cost silver plan," wrote Jessica Van Parys, an
assistant professor of economics at Hunter College, City University of New
York, and the study's author.
She
suggested the ACA's price-linked subsidy policy may have contributed to the
problem by permitting monopolist insurers to raise their prices above what a
fixed-price subsidy market would allow. "The concern going forward is that
monopolist insurers will have leverage to propose large premium increases, and
state insurance regulators may approve those requests to keep the markets stable," Parys
said.
The
study adds to growing research showing provider and payer consolidation is
affecting healthcare prices and costs, and thus access.
A
2017 American Medical Association report found
that nearly 90% of markets in the U.S. have at least one insurer with market
share of 30% or higher. Anthem, a major Blues payer, had the highest market
share in 82 metropolitan areas.
Overall,
69% of markets were "highly concentrated," according to the
report, which noted the share of markets with a single dominant insurer rose 8%
over the prior two years.
Another California study found
prices for hospitals, physician services and ACA premiums were higher in areas
with higher consolidation. Specifically, inpatient and outpatient prices in
highly-concentrated northern California were 70% and between 17% and 55%
higher, respectively, than in less-concentrated southern California in 2017.
ACA premiums were 35% higher in the north versus the south in 2016.
This
year has seen several mega-deals in the insurance space. CVS is in the process
of acquiring Aetna for
about $70 billion. If approved, the merger would create a company with roughly
$245 billion in annual revenues.
And
Cigna is attempting to buy pharmacy benefit manager
Express Scriptsfor $67 billion. The March announcement came on the
heels of Express Scripts' reveal of a partnership with Walgreens Boots Alliance
to expand group purchasing of specialty pharmaceuticals. That deal has hit a
snag, however, with Cigna investor Carl Icahn lobbying against it.
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