South Carolina health insurance market lacks competition
A new report from the American Medical Association suggests that South Carolina may have one of the least competitive health insurance marketplaces in the U.S. The state falls behind Alabama, Hawaii, Michigan, Delaware, and Alaska in terms of a lack of competition in its insurance market. Despite the existence of the state’s health insurance exchange, competition among insurers remains low, limiting the options that state residents have regarding the coverage they have access to.
Blue Cross Blue Shield boasts of majority of the market share
According to the report, Blue Cross Blue Shield of South Carolina accounts for 60% of the state’s market, with UnitedHealthcare coming in as the state’s second largest insurer, accounting for 15% of the market. The lack of competition may be putting some financial strain on consumers throughout the state. The South Carolina health insurance exchange is meant to boost competition, thereby driving down rates for coverage. Without any significant competition, however, the state’s largest providers have little incentive to offer lower rates apart from those imposed by state regulations.
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Other states also have competition problems
South Carolina is not the only state that has low competition in its health insurance marketplace. In 14 other states, one insurance company accounts for the vast majority of the market share. In some of these states, Blue Shield Blue Cross represents the majority. A lack of competition may be ideal for businesses but some consumers have criticized state governments concerning the issue. Currently, each state works to regulate health insurance costs, but regulations cannot keep rates from increases at a regular pace. Without adequate competition, rates continue to grow without any significant mitigation.
Exchanges are not able to solve the competition problem by themselves
Health insurance exchanges are not meant to be the final answer to the competition problem, but they are meant to address the issue to some degree. Many insurance providers, especially smaller companies, have opted not to participate in state-based exchanges system due the federal requirements they would be subjected to. These requirements place significant financial strain on some companies, making exchanges somewhat unpopular for some companies.