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Greater Competition on Tap in Health Exchanges, Obama Administration Says

By Emily Ethridge, CQ Roll Call

May 30, 2013 -- Consumers in the new state health insurance marketplaces overseen by the federal government will see increased competition and choice when insurance plans launch in 2014, the White House said in a recent memo.

Those marketplaces will offer consumers on the individual market much greater choice than they currently have, the memo said, noting that 120 issuers already have applied to offer health plans in the exchanges run by the Department of Health and Human Services (HHS).

"While these data are not final, the early signs are promising and demonstrate a significant increase in competition and an array of options for consumers everywhere," the memo stated.

The Obama administration memo came at a time when some Democrats have expressed concerns over implementation of the health care law (PL 111-148, PL 111-152) and whether the marketplaces will be ready to function. Open enrollment in the insurance exchanges begins Oct. 1, with coverage beginning Jan. 1, 2014.

Senate Finance Committee Chairman Max Baucus, D-Mont., famously said the law could be a "train wreck" if not implemented correctly.
Meanwhile, Republicans have shared reports and studies that warn that health care premiums, especially on the individual market, will significantly increase once the law is fully in place.

In 2014, HHS will run the exchanges in 19 states, while 16 states plus the District of Columbia will run their own. In 15 states, the federal government and state governments will work together on the exchanges.

The White House memo did not address competition in state-run or partnership exchanges. It also did not discuss specific premium rates, but it noted that most insurance plans will have much more competition next year in the individual market.

Currently, most people expected to enroll in state, partnership or federal exchanges live in states with limited health choices, the memo said. The administration found that in 29 states, more than 50 percent of all individual market enrollees are covered by one insurer, while in only five states were a majority of enrollees covered by three or more insurers.

The memo also noted that one out of every four insurance companies proposing to offer coverage in federal exchanges is a new participant in the individual market, and about 75 percent of states with HHS-run exchanges will see at least one new insurance company in the exchanges.

HHS plans to post premiums for the states where it is running the marketplaces in September, once the final contracts are signed, but states running their own marketplaces can post initial rate filings or approvals before then.

So far, it's a mixed picture when it comes to rates in the state-run exchanges. California recently announced that premiums in its individual market exchange would be lower than expected, but in Rhode Island, four insurers who filed to offer coverage requested larger rate increases.

HHS also is reviewing more than 200 proposed multistate health plan options, which will offer similar coverage across state lines, the memo said. Multistate plans will be offered in at least 31 states in 2014, with coverage expanding to all states and the district by 2017.

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