Makes Mobile Phones Seem Like a Free-Market Paradise

If you’re trying to buy health insurance in Eden, N.C., a search on turns up 14 different plans with one thing in common: All come from Blue Cross & Blue Shield of North Carolina. Move 18 miles north to Martinsville, Va., and the federal website displays 50 plans from five insurance companies.
In much of the country, unfortunately, insurance markets look more like single-insurer Eden than the multiple options of Martinsville. The drafters of the Affordable Care Act imagined competitive markets in each state that would allow consumers to compare plans from an array of carriers. But so far 40 percent of Americans live in counties with three or fewer companies selling policies through Obamacare marketplaces, according to data from insurance comparison website ValuePenguin, and a majority have fewer than four to choose from.

To put that in perspective, compare health insurance with a wireless-phone industry seen as so uncompetitive that regulators fought a proposed merger between AT&T and T-Mobile USA. When it comes to shopping for cellular service, 80 percent of Americans can pick from five or more carriers, according to the Federal Communications Commission (PDF). Just 43 percent of Americans under 65 have that many health insurers in their market, according to ValuePenguin’s data.

ValuePenguin has built a data visualization that explores where uninsured Americans are concentrated and what their options look like in the exchanges. In 463 counties that together are home to 2.9 million uninsured people, there’s only a single company selling coverage through the insurance exchanges.

Those counties are concentrated in the South, including in Alabama, Arkansas, Georgia, Mississippi, North Carolina, and Texas. All of New Hampshire and much of rural Nevada are also one-carrier markets, as are parts of Indiana, Tennessee, and Wisconsin.

How much does competition matter? After all, many insurance markets were highly concentrated before Obamacare’s reforms. In 2011 there were 29 states (and the District of Columbia) where a single insurer had at least half the market for individual health plans, according to data from the Kaiser Family Foundation. Research on employer health insurance has found that carriers have greater pricing power in less competitive markets.

And there’s evidence that competition on actually succeeds at holding down premiums. In markets with 10 insurers competing for business, average premiums are as much as one-third lower than those markets with only a single carrier, according to an October analysis by Bloomberg Government’s Peter Gosselin. That’s bad news for the people of Eden, among many other places.

    Before it's here, it's on the Bloomberg Terminal.