An Exchange Without Competition, If Only There Was a Public Option: Part 1,547
An online marketplace without any competition would seem like a pretty silly idea but that will apparently be the reality in New Hampshire. The only choice for people using the new exchange in New Hampshire will be Anthem Blue Cross/Blue Shield of New Hampshire. It was the only company that applied.
The fact that there will be no competition on the New Hampshire exchange is not too surprising given that the individual market in the state was already dominated by only one insurer, but it is a real problem for the new health care law.
The whole justification for the Affordable Care Act was that spending money to create an online marketplace would result in competition that improves quality and reduces prices. Without any competition the government is just wasting a lot of money on a completely worthless extra layer of bureaucracy. Creating a public option would have at least assured a minimum level of competition in every exchange, but Democrats allowed the idea to be killed.
Without even a basic level of competition the design of the law could end up producing some very warped incentives. The law was entirely built around trying to harness the power of the market and is completely unsuited for situations like this.
The size of subsidies are determined by the price of the second cheapest silver plan on the exchange, and the amount many people will pay will be determined solely by their income, not the actual cost of premiums. This means in uncompetitive markets the incentives created by the new law might be for companies to keep premiums high to maximize government subsidies.
We will need to see if in the future the New Hampshire exchange ever attracts more insurers.
Photo by reway2007 under Creative Commons license