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An interesting piece over at the Health Affairs Blog exploring some of the factors that have made the original ACA-style marketplace the cheapest in the country.
Why Massachusetts Stands Out In Marketplace Premium Affordability
Why Massachusetts Stands Out In Marketplace Premium Affordability
Despite operating in a relatively high cost medical state, the Massachusetts Health Connector had the lowest average premiums of any Marketplace in the country for 2017 and 2018. These low premiums benefit not only the quarter million Massachusetts residents enrolled with the Health Connector, but the broader market as well. Massachusetts’s success at keeping Health Connector premiums low is a function of a number of careful state-level policy choices and program design approaches. Exploration of these kinds of tools may be useful to health policy decision-makers in other states, particularly as states take more responsibility for stabilizing and strengthening non-group (individual) insurance markets.
Competition Among Multiple Carriers
[…] Massachusetts has encouraged market competition through a long-standing statutory requirement that carriers with over 5,000 covered lives offer plans through Health Connector. […] All small group and non-group shoppers in Massachusetts can shop through the Health Connector, so a wider range of market participants have the option to benefit from the results of our highly competitive Marketplace than are currently doing so – highlighting an area of untapped opportunity for consumers in our market.
“State Wrap” Rewards And Reinforces Lower Cost Carriers
Though further study is needed, anecdotal evidence indicates that ConnectorCare carriers, who are rewarded for low rates with large shares of enrollment, are able to achieve lower premiums by operating with low administrative margins (in keeping with Massachusetts’s more stringent Medical Loss Ratio [MLR] requirements) and leveraging competitive networks linked to historical experience serving Medicaid populations. […]
Active Purchasing Helps Shoppers Find Lower Cost Plans
Health Connector enrollees tend to pick lower cost plans when given strong decision support and comparison-shopping tools. Like other Marketplaces, the Health Connector has curated a comparison-shopping experience that helps enrollees find lower-cost options. These tools are especially important for unsubsidized shoppers who can currently choose from upwards of 50 plans from 8 carriers (Note 3). In addition, Massachusetts standardizes plans to facilitate apples-to-apples comparisons among carriers, which makes it easier for consumers to evaluate similar options at different price points. […]
Individual Mandate, Merged Market, And Other State Policy Decisions Create A Stable Insurance Framework
In addition to market dynamics specific to the Marketplace, the Health Connector’s low premiums rest on a foundation of strong state insurance regulation that promotes a level playing field. Our 11-year-old state-based individual mandate keeps our risk mix broad and stable. The state’s large pool of insured healthy people (who might otherwise have gone without coverage) likely helps protect our premiums from inflation or volatility. Similarly, our merged market keeps premiums in the non-group market relatively stable by also including small group lives in the same shared risk pool. Other state policy decisions, such as MLR requirements than are required by the ACA, and ongoing investment in tailored outreach to residents in need of coverage, also contribute to low premiums.