Variance in Insurance Rates for Products Sold Through the Exchanges

Comparing the newly announced insurance rates between and even within states is difficult. Comparing the status quo ante with exchange rates fails to account for the richer health insurance benefits found in the ACA created health insurance exchanges. Comparing an urban state with a rural state fails to account for higher labor and overhead costs in the urban setting and the price effects of precious little health insurer competition in rural settings.

But I am intrigued by an article that examines the spread within a state or a major region, comparing the prices of higher cost (richer) health plans sold through the exchanges with more modest health plans (thinner) sold through the same exchanges. You can see a great article here:  http://healthaffairs.org/blog/2013/08/07/premium-rate-variation-in-exchanges-is-an-eye-opener/

Why does this matter?  It gives us a useful snapshot of how the structure of the exchanges has influenced beginning rates. It probably is too soon to tell if choosing to have an active purchaser exchange model is really what drives the relatively small spread between plan levels in California but time will tell, especially when we consider that (at least as of June 1, 2013) several other states had also chosen the active purchaser exchange model.

The federally facilitated exchanges (FFEs) are, of course, clearinghouse-style, offering none of the rate reduction that may flow from the state using its exchange organizing power to drive health insurance rates for products sold within it to lower levels by requiring a kind of bidding process for the privilege of selling within the exchange.

When I look at the prices of exchange purchased health insurance in the California exchange, I have to wonder if — when all is said and done — it may end up being more expensive to purchase through Missouri's FFE than to purchase through California's state-sponsored health insurance exchange.

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