Obamacare Insurance Exchanges and the Lack of Competition

Obamacare Insurance Exchanges and the Lack of Competition.

My guiding principle is, and always has been, that consumers do better when there is choice and competition. That’s how the market works. Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. And without competition, the price of insurance goes up and quality goes down.

—President Barack Obama, September 9, 2009[1]

Obamacare’s government-run insurance exchanges opened for enrollment on October 1, and the Department of Health and Human Services finally released information on insurance plan offerings and prices in the 34 states where the federal government is responsible for running the exchanges.

Analyzing insurer participation in both federal and state-run exchanges shows that the President’s health care law has almost completely failed to increase insurance market competition.

By the Numbers

  • In the vast majority of states, the number of insurers competing in the state’s exchange is actually less than the number of carriers that previously sold individual market policies in the state.[2]
  • At the local level, in over half of the 3,135 counties in the U.S.,[3] consumers will face an exchange market that is either a duopoly or monopoly. In 78 percent of U.S. counties, exchange enrollees will have a choice of coverage from three or fewer carriers.[4]
  • The exchange market in over 94 percent of U.S. counties will feature competition among five or fewer companies. In Alabama, about 96 percent of that state’s counties will have only one insurer offering coverage in the exchange.