As Anthem and CIGNA seek to merge along with Aetna and Humana, we can expect an even larger jump in premiums. Economies of scale are a real advantage but I can assure you after having worked in this industry for 15 years that absolutely
nothing holds prices down like insurer competition. And it appears we are on the verge of losing much of that. This is from
Forbes:
[R]esearchers looked at premium prices from 2014 and 2015, and tested whether those prices went up or down as insurers exited or entered marketplaces. In some localities, you see, a consumer might have had four insurers competing for her business in 2014 and only two in 2015. In other localities, consumers might have seen the number of insurers increase over that same time. The researchers took advantage of this variation in competition to see how prices changed as insurers exited and entered markets.
They discovered that the addition of one insurer to a market was associated with a 2% drop in premiums. Here is picture of that result. (Ignore the bars and focus on the lines, which move from left to right showing a drop in prices as the number of insurers in a given marketplace increases.)
A word of caution here: This study shows correlation, not causation! There are differences across marketplaces that these researchers cannot account for, which might explain their results. ...
