Study: Less competition on the Obamacare exchanges

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Despite President Obama’s call for more competition among health insurance companies, competition has decreased on the Obamacare exchanges, according to a Heritage Foundation analysis.

“My guiding principle is, and always has been, that consumers do better when there is choice and competition,” Obama said during a joint session of Congress in 2009. “That’s how the market works. Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company.”

“And without competition, the price of insurance goes up and quality goes down. And it makes it easier for insurance companies to treat their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest, by overcharging small businesses who have no leverage, and by jacking up rates.”

According to the Heritage Foundation’s Alyene Senger, in most states the number of carriers on that state’s exchange are less than the number that sold on the individual market in the state.

Senger, in an analysis of all 50 states, found that more than half of America’s 3,135 counties would experience an exchange with two or fewer insurance carriers and 78 percent would have a choice of three or less carriers. Ninety-four percent of counties would have a choice of five or fewer.

“In 35 percent of the nation’s counties, exchange enrollees will have a choice of plans from only two insurers—a duopoly. In 17 percent of counties, consumers will have no choice — a monopoly — as only one carrier is offering coverage in the exchange,” she writes. “Consequently, for many Americans, real choice will be very limited in the Obamacare exchanges.”

Just 313 counties out of the 3,135 counties nationwide, according to Senger’s study, have a choice of more than five carriers.

And while Obama lamented that 90 percent of the Alabama health insurance market was controlled by one company in 2009, on Alabama’s exchange 96 percent of the state’s counties will have just one insurance company offering coverage.

“By the standards of the President’s own ‘guiding principle,’ his law largely fails,” Senger writes. “Obamacare’s overregulation of insurance is to blame for the lack of competition in the exchanges. The flawed policies contained in Obamacare neither foster competition nor increase consumer choice, and they will continue to negatively impact American consumers and increase costs.”

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