Will Health Exchanges Really Increase Competition?

The Health insurance exchanges enacted by the PPACA (i.e., ‘Health Reform’) are meant to bring competition to the small group and individual markets.  These exchanges will begin in 2014.  A GAO survey of States, however, found that the current small group health insurance market is very concentrated.

  • There is significant market concentration.  Twenty-seven states reported that the largest health insurer had more than 40 percent of the market whereas in only 12 states did the dominant carrier own less than 40 percent of the market.  In 23 states, the top five plans captured 90 percent of more of the small group plan market share compared to only 16 where the top five carriers captures less than 90 percent of the market share.
  • Blue Cross/Blue Shield is the dominant player.  Of the 44 states reporting this information, BCBS was the largest carrier for small group health insurance plans for 36 of the states and was the second largest carrier for 3 states.  In only 5 of the states did BCBS non rank as one of the top-2 carriers in terms of market share.

Health exchanges may not increase competition, but instead be a boon for the established players in the individual and small group markets.


  1. The Health Exchange will arrange for a place where anyone can find and compare reasonable cost, quality health insurance possibilities. Individuals will not have to be on their own in trying to find comprehensive reasonably priced health insurance coverage. The Health Exchange is taking a complicated experience of purchasing insurance into a simple experience for individuals looking for health insurance. They will be able to compare plans based on its price and quality. This will increase competition between insurance companies and allow individuals and small businesses to come together to purchase insurance.

  2. I think that Health Exchanges will bring competition.
    There is no doubt that the health insurance market is very concentrated for small group health insurance plans already—most of the time we are talking about the Blue Cross and Blue Shield here. For other players, in order to survive and gain their market share in health exchange, they would either figure out better choice of product to attract customer or band together with other players. I believe that either way this will increase competition and increase variety in health insurance options.

  3. Health exchange will definetly change the market. If other health insurance companies are able to offer the same plans as larger copmpanies there wouldn’t be any monopolizing on BCBS and Cigna’s part. People will be able to look at the quality of the plans and have a choice of affordable pricing.

  4. Health Exchanges will most definently stir up competition within the market. Many insurers will have to modify their insurance plans that they offer in efforts to make it more attractive to the market. As a consumer there will be much to take into consideration such as affordability, quality and coverage. This in turn will hopefully create more access to health care for many of those in the market currently with no coverage.

  5. In my opinion, the health exchange will alter the current market for insurance and health coverage, thus providing place where many will have access to reasonable cost policies with great quality offered. If other insurance companies are in a position where they are able to attract more consumers by providing the same plans as larger and more established companies, then by all means, competition amongst all providers will peak. On the plus side, consumers will have an array of options when considering a policy which is better for us, but not so much for the companies providing the coverage.

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