How does obamacare increase competition with insurance companies?

[MisterFutu]

How does obamacare increase competition with insurance companies?

On the obamacare website, it does not mention how, but just states that it will increase competition and thus lower premiums.

I wish I took economics, but I am at a stump with this quandary.

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[Spinach Dip]

On the obamacare website, it does not mention how, but just states that it will increase competition and thus lower premiums.

Welcome to political doublespeech.

Other examples include:
-I will balance the budget.
-Fair trade will help our economy.
-I did not have sex with that woman.

 

[RuggerMD]

I think the idea is that by having more readily available*, low cost healthcare plans on the market, companies will be forced to drive their price down (or increase their coverage) to compete for both individual person and small business enrollees. Supply/demand type deal. Whether it is working, that I have no idea.

* centralizing healthcare plans is a new thing with obamacare. You used to have to shop for coverage individually, making comparisons more difficult. The online markets now make that process easier (when the website isn't crashing into oblivion) and thus make consumers more educated and able to find lower cost options.

 

[DokterMom]

It has absolutely lowered healthcare premiums for my family and made the process much more transparent and secure. So if all companies (or nearly all) competing for customers in a given area post their plans on an exchange in a easily compared format, the lower-priced plans can be easily spotted, and all things considered, chosen over the more expensive but not better alternatives -- the central idea being that an informed consumer is an empowered consumer.

Insurance companies competed before to some degree, but for company-wide plans, not for individual consumers. So consumers had no input into what they wanted to purchase. Those who receive health insurance as part of a standard employment agreement still don't, really. But individuals do. And they now have a multitude of standardized, 'packaged' plans to choose from, each of which is administered 'in bulk' by the insurance companies (so at lower cost than before, when individual plans were an exception).

Though costs have often times continued to increase, the rate of increase has slowed considerably.

 

[Syns]

Three factors, from what I understand, led to an increase in competition for your money (therefore reduced costs):

1) Broke down state regulatory boarders which prevented interstate insurance competition.
2) Provided a public option to prevent price fixing by the major conglomerates.
3) Produced a main access point for commerce to make selection/comparison easier. (marketplaces)

EDIT: GAH!!!

How could I forget one of the most powerful economic staples! Supply vs Demand.

The marketplaces automatically group people together who want similar plans (which packages your deal and provides an incentive for companies to fight for that business). In the past, individuals were forced to pay much larger premiums than corporations who purchased (sometimes) 1000s of plans simultaneously. This measure was made to emulate the purchase power of large corporations by mimicking the grouping pattern and leveraging that weight for better prices.

 

[raiderette]

Within each option there are multiple plans. The companies need to offer the same benefits for the lowest price in order to get consumers. Also, as I saw with family members last year, the consumers chose different providers if they didn't like the service from the insurance companies. My own state has most of the insured under one insurance company. They are mediocre at best. ACA opened up for more insurance companies to compete in Indiana and we saw people shifting. It is a win-win here.

 

[deleted393595]

How does obamacare increase competition with insurance companies?

On the obamacare website, it does not mention how, but just states that it will increase competition and thus lower premiums.

I wish I took economics, but I am at a stump with this quandary.

Don't worry. You don't need economics to understand the Affordable Care Act. Its writers didn't either.

 

[Lawpy]

And yet another Obamacare/ACA thread. Although compared to other junk threads, this one is actually informative, so good work everyone.

Don't worry. You don't need economics to understand the Affordable Care Act. Its writers didn't either.

Who needs to learn economics when we got Jonathan Gruber?

 

[Oh_Gee]

why have other people's premiums gone up then

 

[LizzyM]

Initially, premiums go down as insurers fight for customers. However, if the premiums are too low to cover expenses, premiums are going to go up. One thing that can go wrong is that the insurer has signed up a large proportion of people who use a lot of health care services and fewer customers who are very healthy and who use little or no health care. That is why there was such a huge push to get young, healthy people to sign up when ACA began; their premiums make it possible to charge less to all customers. (keep in mind that the ACA requires that all customers be charged the same without regard for age or health status.)

When insurers see their income and expenses, they may discover the need to raise premiums to stay afloat.

Insurers are also faced with mergers and acquisitions. Companies are merging or acquiring other companies to consolidate their power in the marketplace and while they may be constrained by anti-trust laws that prohibit some types of monopolies, there is a shrinking of the options available to some customers.

 

[DokterMom]

why have other people's premiums gone up then

Before the ACA, the only individual policies I was able to purchase were full of exclusions, so shoddy and incomplete that they did not even meet the minimum standards required of ACA plans. You know the whole "You can keep your insurance plan" promise? Well, lots of plans were so lousy they could not be kept. And folks, these were not just the 'bare bones cheapo plans' either -- but rather, almost anything sold to individuals. Truly, crappy "insurance" plans. But that was all that was available to healthy individuals let alone sick ones... (I was not trying to be 'cheap' and was spending close to $20,000 per year to insure my family. That's not a typo.)

I expected that my health premiums might go up once I was able to trade a crappy plan for a comprehensive one through the ACA exchange -- only fair, right? But no. My costs actually went down - significantly - for a plan that was so much better than what we had before. Did I spend a lot of healthcare dollars that first year for deferred services? You bet! And I'll bet a lot of other people did too. Next year, the premium went up. Way up. No surprise there. But still, no more than I had been forced to pay before for a policy that was so full of holes that it didn't offer any financial security.

So bottom line, my take is that if your rates went WAY up, it was probably largely because what you're getting now is a much more comprehensive policy than what you had before. If they went up a little, it's because healthcare expenses in general go up, and because other people's 'deferred maintenance' catchups are causing an incremental bump.

 

[Oh_Gee]

Before the ACA, the only individual policies I was able to purchase were full of exclusions, so shoddy and incomplete that they did not even meet the minimum standards required of ACA plans. You know the whole "You can keep your insurance plan" promise? Well, lots of plans were so lousy they could not be kept. And folks, this were not just the 'bare bones cheapo plans' either -- but rather, almost anything sold to individuals. Truly, crappy insurance plans. But that was all that was available to healthy individuals let alone sick ones... (I was not trying to be 'cheap' and was spending close to $20,000 per year to insure my family. That's not a typo.)

I expected that my health premiums might go up once I was able to trade a crappy plan for a comprehensive one through the ACA exchange -- only fair, right? But no. My costs actually went down - significantly - for a plan that was so much better than what we had before. Did I spend a lot of healthcare dollars that first year for deferred services? You bet! And I'll bet a lot of other people did too. Next year, the premium went up. Way up. No surprise there. But still, no more than I had been forced to pay before for a policy that was so full of holes that it didn't offer any financial security.

So bottom line, my take is that if your rates went WAY up, it was probably largely because what you're getting now is a much more comprehensive policy that what you had before. If they went up a little, it's because healthcare expenses in general go up, and because other people's 'deferred maintenance' catchups are causing an incremental bump.

lol the bolded reminds of this quote from the movie, Accepted
http://www.imdb.com/name/nm0085400/
"Uncle Ben: Health insurance my ass! They don't pay for $#!t. You get sick on a Friday, they only pay from Monday through Thursday. You go to doctor A, they only pay for doctor B. You break your penis, they only fix vaginas!"


on another note, what do you all think about non-profit insurance groups. it seems to work well in other countries like Germany

 

[deleted393595]

Who needs to learn economics when we got Jonathan Gruber?

I had no idea he wrote a book about healthcare reform! Lol!

 

[DokterMom]

lol the bolded reminds of this quote from the movie, Accepted
"Uncle Ben: Health insurance my ass! They don't pay for $#!t. You get sick on a Friday, they only pay from Monday through Thursday. You go to doctor A, they only pay for doctor B. You break your penis, they only fix vaginas!"


on another note, what do you all think about non-profit insurance groups. it seems to work well in other countries like Germany

Great quote. But definitely inaccurate in that the old plans never fixed vaginas. Penises maybe. Remember who wrote those plans after all...

Honestly, I think what most of the other developed countries (like Germany) are doing makes much more economic sense than what we're doing. Bad news for physicians, I suppose, but probably the best thing for consumers / taxpayers.