The health insurance marketplaces established by the Affordable Care Act are scheduled to open in just over two months. Proponents of the law argue the marketplaces will offer high-quality insurance at competitive rates for millions of consumers. Critics argue Americans, especially those who are healthy, will balk at enrolling, causing the would-be markets to unravel. In a new report, we draw on a rich body of independent research that uses detailed real-world health care datasets to infer what will happen when the new insurance markets open.
The answer? Well-functioning insurance markets, the studies show, have the power to offer lower premiums and more consumer choice. But these benefits are contingent upon attracting consumers, especially healthy ones, to the marketplaces.
Key findings in the new report include:
- With full participation, premiums for individuals between the ages of 25 and 30 fall more than one-third compared to a baseline of ‘market unraveling’. Participation can create a virtuous cycle where lower prices reflect the inclusion of young and healthy individuals and this in turn encourages them to participate.
- A liquid health insurance marketplace can add competitive pressure that brings prices closer to cost. In the Massachusetts marketplace, premiums fell more than 10 percent because of reduced insurer markups alone.
- The insurance marketplaces will generate great consumer choice, contingent upon insurer participation. Currently, most Americans are offered one or two health plan choices through their employer. One study estimates that the median consumer would be willing to pay increased premiums of up to almost 30 percent to include their ideal plan in their set of choices.
- Efficient marketplaces increase labor market mobility. One important contributor to ‘job lock’ is the lack of a viable alternative to employer-sponsored health insurance, and the ability of insurers to discriminate based no pre-existing conditions. Eliminating these barriers could reduce job lock on the order of 25 percent.
The full report can be read here: https://bit.ly/aca-report