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Analysis shows more consumer options after state insurance exchanges set up

The number of insurers offering nongroup plans to consumers this fall in state-run health insurance exchanges will be much greater than the current number, according to an analysis from the Robert Wood Johnson Foundation (RWJF). The foundation’s State Health Reform Assistance Network compared insurers offering plans prior to national health reform with insurers applying to operate in state exchanges. The analysis uses data from all 10 states, including Washington, that have released information on carriers that will operate in their insurance marketplaces.

Across the 10 states, the number of carriers offering individual insurance coverage will increase substantially, from 52 to 70 plans — an increase of 35 percent — according to the report. Six of the 10 states will see more insurers operating on the nongroup exchange compared with the number of significant competitors pre-reform. Four states expect no change. In Washington, the analysis shows an increase from six to nine insurers.

“More carriers competing in a state means more choice for consumers. That increases pressure on insurers to reduce price and improve service,” said Andy Hyman, who leads health coverage programs at the Robert Wood Johnson Foundation. “This level of competition signals that the state exchanges will be vibrant marketplaces.”

Researchers focused on the nongroup market because it currently offers limited options and little information to guide consumer choice, and will therefore be substantially altered by the Affordable Care Act, the RWJF report said. Because tax credits for individual coverage premiums require obtaining insurance through an exchange, most insurance companies committed to the nongroup market will choose to participate.

“How competition will develop in the states is still evolving, but early evidence is showing an increase in competition in most state-based exchanges,” said Heather Howard, director of RWJF’s State Health Reform Assistance Network and a lecturer in public affairs at Princeton University. “The robust competition we’ll see in these states is good news for consumers, because companies have an incentive to provide high-quality, affordable plans through the state-based exchanges, and carriers are clearly interested in these new markets.”

The other nine states analyzed for the report are California, Colorado, Connecticut, District of Columbia, Maryland, Massachusetts, Oregon, Rhode Island and Vermont.

See the analysis at www.rwjf.org.

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