First-year insurer participation in the Health InsuranceMarketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for HIM participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums.We exploit variation in ratings-area-level competition induced by UnitedHealthcare’s decision not to participate in any of the FFMs.We estimate that the second-lowest-price silver premium (which is directly linked to federal subsidies) would have decreased by 5.4 percent, on average, had UnitedHealthcare participated. If all insurers active in each state’s individual insurancemarket in 2011 had participated in all ratings areas in that state’s HIM, we estimate this key premium would be 11.1% lower and 2014 federal subsidies would be reduced by $1.7 billion.
- Federally facilitated marketplaces
- Health insurance
- Health insurance exchange
- Insurance market competition
ASJC Scopus subject areas
- Health Policy
- Public Health, Environmental and Occupational Health