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Why do individuals pay slightly more for health coverage in NC under the ACA? Lack of competition

Today reports [1] point out that individuals who don’t get their health insurance through their work and who buy coverage in the NC health marketplace set up by the Affordable Care Act will pay – on average – slightly more for that coverage than the national average.  Unfortunately, there’s little analysis about why this is the case. [See my post [2] from yesterday to see that despite this, with subsidies premiums for many will be under $100 a month in the new health marketplace.]

One major reason for the slightly higher prices is directly attributable to the NC General Assembly and Governor Pat McCrory’s decision this year to decline for North Carolina any role in running the new NC health marketplace under the ACA. Because of that decision, the NC Department of Insurance – the regulator most familiar to health insurers operating in our state – has no role in the operation of our health marketplace. As a result, insurers are much warier about joining the marketplace and offering plans. At this point, NC has only two insurers offering plans in the NC federal marketplace: NC Blue Cross and Coventry Health Plans.

Recently the Kaiser Family Foundation released a report [3] about health premium costs across states. The report included a chart listing the states studied and the number of insurers in each state’s new health marketplace. States who either set up their own health marketplaces under the ACA or have heavy involvement in selecting plans or running the marketplaces have many more plans than states that have ceded the responsibility for running the marketplace to the federal government.

 States in bold either run their own health marketplaces or have significant state involvement in the marketplace:

State Number of Insurers
CA 12
CO 10
CT 3
DC 4
IN 4
MD 6
ME 2
MT 3
NE 4
NM 5
NY 16
OH 12
OR 11
RI 2
SD 3
VA 9
VT 2
WA 4*

So, other than tiny states like Rhode Island the Vermont, all states that have some significant involvement in running the health marketplaces in their states have much higher involvement of health plans in their states. The decision by McCrory and the NC General Assembly to let the federal government run the health marketplace in NC was one that will cost many of our state residents more money as they buy health plans. It was shortsighted, but can be changed next year.