After three years of preparation and much anticipation, Americans can finally see whether Obamacare’s state or federally operated insurance exchanges will provide more competition for consumers’ business. As the table shows, the results are in, and there seems to be no correlation.
Heritage Foundation senior fellow Ed Haislmaier recently examined insurer participation in the exchanges and concluded, “There does not appear to be any correlation between the level of insurer participation and whether the state or the federal government operates the exchange. Rather, state-specific exchange participation seems to generally reflect current insurance-market-participation patterns in the various states.”
Overall, Haislmaier found that “the 51 exchanges in the states and the District of Columbia will have a total of 254 participating carriers, for an average of five carriers each. New York will have the most, with 16 participating carriers, while New Hampshire and West Virginia will have the fewest, with only one carrier offering plans in each state’s exchange.”
Though five participating insurers is the average, if we look deeper, we find that only 19 states will have five or more insurers offering exchange coverage, while 23 states will have three or fewer insurers offering coverage in their exchanges.
So if states that didn’t set up their exchanges are not to blame for the lack of competition, the onerous requirements included in Obamacare must be. As Haislmaier explains, the law standardizes insurance plans:
Indeed, the differences among the plans offered by each insurer will mostly consist of variations in the level of enrollee cost sharing, as Obamacare requires all exchange plans to offer standardized minimum benefits at prescribed levels of enrollee cost sharing. In fact, offering additional benefits above the required minimum risks making a plan more expensive and less competitive.
It does not matter who is operating the exchanges. The failure of most exchanges to provide more competition is a direct result of the regulations and requirements imposed by the law. Simply put, the fault is in the design.
Louis Phillips is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.