In September, 2009, President Obama delivered a primetime address to a joint session of Congress making his pitch for the health care law that we now know as Obamacare. Among the problems that Obama said the law was supposed to address was a lack of competition in the individual insurance market.
“Consumers do better when there is choice and competition,” Obamasaid. “That’s how the market works.” He lamented, however, that “in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company.” The inevitable result was more expensive insurance and worse quality coverage. It was easier for insurers to take advantage of customers.
Obamacare was to solve this problem by creating insurance exchanges—state-based marketplaces where individuals would be able to shop for insurance. These marketplaces would be attractive to insurers. “Insurance companies,” Obama said, “will have an incentive to participate in this exchange because it lets them compete for millions of new customers.”
Almost seven years later, Obamacare is the law of the land, and in several exchanges, the number of insurers is dwindling. In April, after months of warnings, UnitedHealth, the nation’s largest health insurer, announced that it would pull out of the most of the state exchanges where it is now operating. Weeks later, another insurer, Humana, announcedthat it was quitting exchanges in Alabama and Virginia.
What this means is that in many rural areas, Obamacare’s exchanges will be served by one and only one insurer. A recent report by the Kaiser Family Foundation found that some 650 counties in states like Kentucky, Tennessee, Mississippi, Arizona, and Oklahoma were likely to have just one carrier next year. In Wyoming, Alaska, and Alabama—yes, the same state that Obama highlighted in his 2009 speech—the exchanges will feature no competition anywhere in the state. In places like these, Obamacare has not solved the problem of too little competition in the health insurance market; it has allowed it to continue, and perhaps even contributed to it.