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Context From The Talk

Lanhee Chen On Competition in the Health Insurance Market

High Premiums, Low Competition

“What we’re seeing is acceleration in premiums. This has happened over the last couple of years and it is going to continue happening as we go forward.

Now, part of the reason why these premiums have gone up is the structure of Obamacare. But it’s also the case that fewer and fewer insurers want to sell Obamacare compliant policies, because they lose money on them. There’s no reason for them to sell policies if they’re going to lose money. 

Furthermore, Republican congresses and this administration have refused to pay the insurance companies some of what is known as risk mitigation funding. Obamacare included in it large pots of essentially payoffs for insurers to participate in Obamacare, and what Republicans have said is basically, “No, we’re not going to do this anymore.” And so insurers have said, if we’re not going to get the money, then we’re going to have a difficult time justifying why it is that we’re offering insurance in marketplaces where we’re going to lose money. 

What you see here is planned competition has come way down. In 2018, the number of counties where there is only one insurer went from about one thousand to over sixteen hundred. The measure of competition in the marketplace has gone down dramatically.

So what do we know? Competition goes down, prices go up as well. 

All of these factors together are related to the structure of the law, they’re related to some policy decisions that have been made. But make no mistake, the people who are most affected by the turmoil in the individual market are those who don’t get coverage through their employer, those who work for small companies that don’t offer coverage, and those who work multiple low-paying jobs.

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