High Premiums in Nongroup Insurance Markets: Identifying Causes and Possible Remedies

Research Report

High Premiums in Nongroup Insurance Markets: Identifying Causes and Possible Remedies

Abstract

Although marketplace nongroup premium increases vary widely across and within states and across different insurers, a significant number of geographic areas are experiencing larger increases in 2017 than the first years of ACA implementation. Still, many markets, especially those in highly populated urban areas, continue to operate effectively with reasonable premiums and lower premium growth. Some markets with recent high premium growth were previously underpriced, so pricing is now “catching up” to national averages. The markets deserving attention are those where high premium growth has led to high premium levels because of: (1) adverse selection into the ACA-compliant nongroup insurance market as a whole; (2) high concentration in insurer and/or provider markets; and (3) adverse selection among the ACA-compliant nongroup insurers, insufficiently corrected by risk-sharing mechanisms. We explain each potential cause of high premiums and discuss policy options that could address them.

Research Area: 

Centers

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