Premium Affordability, Competition, and Choice in the Health Insurance Marketplace, 2014. V. Conclusion


The Affordable Care Act aims to improve consumer access to and choice of affordable coverage by promoting competition in the individual health insurance market and by providing financial assistance to consumers based on their income.

Premium affordability is enhanced by the advance premium tax credit—69 percent of the individuals who selected a plan with tax credits through the Marketplace have coverage that costs $100 or less a month in premiums after tax credits. Overall, individuals selecting plans with tax credits have premiums that are 76 percent less, on average, than the full premium before tax credits. Individuals selecting silver plans with tax credits experienced an 80 percent reduction in premiums due to the tax credits and have a monthly premium of $69, on average.

We find that consumers have, on average, five issuers and 47 Marketplace plans from which to choose when considering their options for coverage. Our analysis of second-lowest cost silver plan premiums indicates that in markets with more sellers there are lower premiums for the second-lowest cost silver plan. This analysis finds that each additional issuer is associated with a 4 percent decline in the second-lowest cost silver plan premium.

Areas with a greater number of issuers also tend to offer a wider range of choices for consumers among plan types (e.g. PPOs, HMOs, CO-OPs) that appear to result in greater variation in premiums across the rating areas, suggesting complex competitive interactions. If more issuers come into the Marketplace in future years, it seems likely not only that consumers will have a greater choice of plans, but also that the benchmark plan (second-lowest cost silver plan) will become even more affordable.

The findings in this brief represent early analyses for the first year of the Marketplace, and we expect this new, competitive health insurance market will continue to evolve.

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