Brief Is There Potential for Public Plans to Reduce Premiums of Competing Insurers?
Linda J. Blumberg, John Holahan, Erik Wengle, Caroline Elmendorf
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There is considerable interest in making a public option available in the Affordable Care Act (ACA) nongroup marketplaces. A public option could catalyze competition in less competitive markets, leading other marketplace insurers to lower their premiums. We analyze commercial insurers’ experiences competing in marketplaces with managed-care organizations, which, prior to ACA implementation, only offered coverage within public programs (either Medicaid only or Medicaid and Medicare). These managed-care organizations, though not purely public options, represent a proxy for them. Our analysis finds an association between the presence of a Medicaid insurer in a rating region and competing insurers (e.g., Blue Cross Blue Shield, provider-sponsored plans, national and local commercial insurers) offering lower premiums.

Research Areas Health and health care
Tags Federal health care reform Health care spending and costs
Policy Centers Health Policy Center