May 9, 2016

NO BUSINESS ACTUALLY WANTS COMPETITION:

A good prognosis for the Affordable Care Act as UnitedHealth says goodbye (Editorial Board, 5/09/16, Washington Post)

Though UnitedHealth is the country's largest health insurer, it is not a dominant player in the marketplaces that the ACA set up for individual insurance buyers. It covers only about 6 percent of 12.7 million marketplace participants. United does not appear to have been very effective at competing to attract customers. An Urban Institute study found that United's premiums tend to be higher than competitors', perhaps because its plans offer wide networks of doctors, hospitals and other providers to choose from, which is expensive. Unsurprisingly, marketplace insurance buyers tend to pick lower-cost options. The Kaiser Family Foundation concluded that even if United stopped participating in all ACA marketplaces, premiums would go up about 1 percent overall.

United's selective exit from ACA marketplaces appears to reflect two positive features of the law. First, Obamacare was meant to spur competition among insurance companies, thus constraining premiums; in many markets, this dynamic appears to be at work, to the detriment of United. Second, the law has curtailed many of the ways that insurers used to contain their costs, such as refusing to cover certain people or certain treatments, or jacking up premiums for older customers. Many insurers on the ACA marketplaces have responded by offering plans that keep costs down by narrowing their networks of providers. This is a better way to contain costs than those the law forbids.

Posted by at May 9, 2016 7:35 PM

  

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