How competitive is your state’s individual medical insurance marketplace? « Health Insurance Advisory

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new healthcare reform lawThe new healthcare law, called the Patient Protection and Affordable Care Act (PPACA), represents comprehensive healthcare reform legislation signed into law on March 23, 2010. It contains numerous provisions designed to protect consumers and promote low cost medical insurance, including many new taxes to pay for the cost.

In this section of the site, you can also obtain the following information specific to your state: available medical insurance options, efforts to regulate medical insurance premiums, healthcare, the individual medical insurance marketplace and the new healthcare law.

Our objective is to help Americans make sense of the new healthcare law by explaining key provisions in plain English and assisting individuals, families and the self-employed in using this information to find and secure affordable medical insurance.

How competitive is your state’s individual medical insurance marketplace?

A new report by the Kaiser Family Foundation reveals the results of an in depth study into the competitiveness of each state’s individual health insurance marketplace. The results will likely surprise you. This report is important because a “competitive” market is considered healthy and robust with no one insurer dominating the market place. Generally speaking, a more competitive market translates to more affordable medical insurance.

The greater a health insurance company’s market share, for example, the more leverage it has to negotiate deeper discounts with healthcare providers. If the claims expense of other health insurers is higher, then it is more difficult for these carriers to compete for business (higher cost of doing business means higher premiums are needed to cover the added cost).

For purposes of this study, two factors were measured to determine the competitiveness of each state’s health insurance market. They were: 1) evaluating how much of the marketplace is controlled by one medical insurance company or health plan, and 2) counting the number of insurance companies that compete in the state that have at least a five percent market share.

Why these two factors? If one health insurer, for example, controls more than 50% of the individual medical insurance marketplace, then that carrier is able to exert more influence over the market, thereby resulting in a less competitive environment. On the other hand, if there are many medical insurance carriers competing for business in a given market with no one company controlling more than 50% of the marketplace, then that market is considered more competitive.

“Competitive” does not necessarily mean, however, that medical insurance premiums in the state are low cost and affordable. Although New York, for example, has a very competitive individual medical insurance market (five 5 insurers with more than a five percent market share with no one carrier having more than 34% market penetration), it is one of the least affordable states for medical insurance. Why? Medical insurance premiums are based on the cost of healthcare. If the cost of medical services and supplies are expensive, then so will the cost of insurance. In sharp contrast to New York is Alabama. Considered the least competitive market for individual medical insurance, Alabama has only two insurers with more than a 5% market share, but one carrier has an 86% market share.

States with the least competitive individual medical insurance marketplace include:

  • Alabama
  • District of Columbia
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Maryland
  • Minnesota
  • Nebraska
  • New Hampshire
  • New Jersey
  • North Carolina
  • North Dakota
  • South Dakota
  • Vermont
  • Virginia

States with the most competitive individual medical insurance marketplace are:

  • Colorado
  • Georgia
  • Missouri
  • New York
  • Oregon
  • Pennsylvania
  • Tennessee
  • Wisconsin

The three states with the highest number of health insurance companies competing for individual medical insurance business are Colorado, Georgia and Oregon.  Each of these states has seven health insurers that have at least a five percent market share.

As it relates to the remaining states not mentioned above, the study reported that a single insurer dominated at least 50% of the individual market, resulting in a less competitive climate.

Regardless of what state you live in, it always pays to shop for an individual medical insurance plan to ensure you secure the highest quality, lowest cost health insurance plan available. Our online health insurance quotes will enable you to run side by side comparisons of health plans from top medical and dental insurance carriers in your state. Get started today!

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