A study of six states’ implementation of their health benefit exchange marketplaces concludes that while most observers believe the first year of the exchange marketplace will be “somewhat chaotic” as health plan issuers attempt to determine the correct balance between risk assumption and attractive pricing, there will be significant participation and competition among plans. It will be a new market, a revamped risk pool and untested regulations certain to dominate the thoughts and strategy of health plan executives over the next 2-3 years.
The pricing of plans is a matter of great uncertainty. Carriers face many new requirements, including essential health benefits, actuarial value tiers, guaranteed issue, and rating rules, as well as uncertainty about characteristics of enrollees. Many plans indicate that they will set premiums cautiously to avoid losses. Those who price too cautiously could achieve protection against the costs associated with bad risks but have few enrollees. Others recognize the need to price more aggressively in order to gain market share. Most believe that the first year will be somewhat chaotic. When there is a better understanding of the health characteristics of enrollees and the ability of risk corridors and risk adjustment to protect plans against risk, pricing will become substantially more aggressive.
The six state exchange marketplaces reviewed as part of Robert Wood Johnson Foundation’s State Health Reform Assistance Network were Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia). Click on the title to read the full study, Cross-Cutting Issues: Insurer Participation and Competition in Health Insurance Exchanges: Early Indications from Selected States.
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