Report: Competition on ACA federal exchange rose between 2014 and 2015

Competition among insurers offering plans on the federal health care exchange rose between last year and this year, tamping down growth in premiums, says a federal report released Thursday.

Meena Seshamani, director of the Office of Health Reform in the U.S. Department of Health and Human Services, calls that good news. "We want to promote competition and choice for consumers," she says.

The report says 86% of people eligible for qualified health plans on HealthCare.gov had access to at least three insurers this year, up from 70% in 2014. Nearly 60% of U.S. counties saw a net gain of at least one insurer, 8% saw a loss, and 33% saw their numbers unchanged, the report says.

Competition affected how much people paid for their plans, the report says, with premium growth between 2014 and 2015 for benchmark (second-lowest cost) silver plans 8.4 percentage points lower in counties that gained insurers than in other counties. In fact, a net gain of one insurer was associated with a 2.8 percentage point drop in the rate of benchmark premium growth.

The average growth rate in the benchmark premium was 2%, the report says.

Premium growth and competition vary from one location to the next, however, and Justin Holland, an insurance agent in San Antonio, says he hasn't seen much competition and doesn't expect to see much during the next open enrollment starting in the fall.

"We service clients from all over the state of Texas, and I can tell you that there are a handful of counties that we are limited to just a few carriers with high premiums for plans that offer co-pays and lower deductibles," says Holland, of Texas State Financial & Health, members of the San Antonio Association of Health Underwriters.

He says looming insurance mergers also don't bode well for competition. Anthem recently announced a $54 billion deal to acquire Cigna, and Aetna announced an agreement to acquire Humana for $37 billion.

"That's shrinking the carriers," Holland says. "That's not good for the consumer right off the bat."

But Richard Frank, HHS assistant secretary for planning and evaluation, says the proposed mergers face a long regulatory approval process, so it's difficult to know how they will ultimately affect competition and premiums on the federal exchange.