Obamacare exchanges are more competitive in their second year, but they still fall far behind the private insurance market before the health-care law took them over, according to an analysis from the Heritage Foundation.
After a number of insurers declined to participate in Obamacare exchanges during the first, riskiest year of their operation, the Obama administration made much of the increase in insurers for the second open enrollment period. Ahead of year two, 77 more insurers joined Obamacare exchanges across the country, a 25 percent boost in participating companies.
But that still leaves the public exchanges far behind the pre-reform individual insurance market, according to Heritage. The Obamacare market is 21.5 percent less competitive than the individual insurance market was in 2013, the year before Obamacare regulations hit and exchanges opened, when the number of insurance carriers in all 50 states are considered.
That’s better than the first year of the health-care law. At Obamacare’s launch, the exchanges were 36 percent less competitive than the 2013 market, according to a similar analysis Heritage ran in 2014.
But a competition gap of thousands of insurance companies remains. Heritage noted that the General Accountability Office had demonstrated an even bigger disparity between the private insurance market and Obamacare exchanges by using a broader methodology. According to the GAO, in 2013 the individual insurance market encompassed 1,232 insurance carriers selling full health coverage. Obamacare exchanges support just 310 insurance companies as of 2015.
The administration has tried to present Obamacare exchanges as engendering more competition than the private insurance market, but the reality is different. Even after the uptick in insurance offerings on the exchanges this year, customers in one-third of all counties in the U.S. have an exchange market with only one or two insurers — very few options for affordable coverage.
And this year, 89 percent of all counties have five or fewer insurance companies on their exchanges, down from 94 percent last year. In West Virginia, the entire state has just one option of insurer on the exchange.
It’s an especially stark failure for Obamacare exchange because President Obama himself singled out a lack of choice of insurance companies as a failure of the private market.
“Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies,” Obama said in 2009, Heritage points out. “Without competition, the price of insurance goes up and quality goes down.”