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HHS: Cost of Health Law Coverage Fell with More Competition

By Melanie Zanona, CQ Roll Call

July 30, 2015 -- Increased competition among insurers vying for customers on the health law's insurance exchanges helped drive down premiums in 2015, the Health and Human Services Department (HHS) said in a report Thursday.

During the 2015 open enrollment period, 86 percent of consumers shopping on the exchanges established by the Affordable Care Act could choose from at least three issuers, up from 70 percent in 2014, according to the report on competition and choice.

Most counties gained at least one issuer since the previous open enrollment period, while 33 percent held steady and only 8 percent lost an issuer, HHS said.

"Economists believe that an appropriate long-term metric for success in the marketplace is whether we're able to achieve and maintain the appropriate number of issuers to maintain vigorous competition," said Richard Frank, assistant secretary for planning and evaluation, during a recent press call. "Because there's more choice, we have a better chance of getting consumers' preferences met."

The report comes amid concerns over the rising costs of exchange plan premiums, with some insurers announcing rate hikes for the 2016 as a result of higher-than-expected doctor visits and drug costs. A series of health insurer mergers is also generating concern about the broader competitive landscape, with provider groups urging the Obama administration to review the deals.

HHS officials said the entrance of new issuers puts pressure on existing plans to keep rates low. The report found that in counties with three or more issuers, premiums were 9 percent lower than those with only one or two issuers to choose from.

"They force the incumbent, who is being threatened, to protect their market share," Frank said.

Overall, average premium increases between 2014 and 2015 were generally low for silver-tier plans, which cover 70 percent of costs. The average premium growth rate was 2 percent in the second-lowest silver plan, and premiums decreased in some areas, according to the HHS report. When pressed about the upcoming enrollment period, Frank said "so far, the fundamentals look pretty good and there will be competition."

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