Keeping health insurance costs down while improving the quality of healthcare was a goal of the Affordable Care Act – and the 2010 federal law has, in fact, succeeded in covering more Americans and containing many healthcare costs. But as several of the nation’s largest health insurance companies consider potential mergers, the vision of a more competitive insurance market begins to seem overly optimistic.
Is there a silver lining here? Richard Scheffler, Berkeley professor of health economics and public policy, thinks so. He and co-author Sherry Glied — dean and professor of public service at New York University – explore this topic in a recent New York Times op-ed. To do so, the two report on research comparing how the states of California and New York designed their healthcare marketplaces in response to the law.
“Under the act, states have some flexibility in designing their marketplaces,” they write. States could accept all insurers who seek to participate or they could select a limited number of companies approved to sell coverage. “New York chose the first course, permitting all willing insurers to join; California chose the second, selecting 12 of the 32 insurers that initially showed interest.”
Sheffler and Glied report, in part, that in both states, “areas with more hospitals had lower premiums compared with areas with fewer hospitals. But in New York, areas with fewer insurers had higher premiums, suggesting that insurers kept the benefits of greater bargaining power for themselves.”