How Insurers Competed in the Affordable Care Act's First Year

Prior to the Affordable Care Act (ACA), most states' individual health insurance markets were dominated by one or two insurance carriers that had little incentive to compete by providing efficient services. Instead, they competed mainly by screening and selecting people based on their risk of incurring high medical costs. One of the ACA's goals is to encourage carriers to participate in the health insurance marketplaces and to shift the focus from competing based on risk selection to processes that increase consumer value, like improving efficiency of services and quality of care. Focusing on six states--Arkansas, California, Connecticut, Maryland, Montana, and Texas--this brief looks at how carriers are competing in the new marketplaces, namely through cost-sharing and composition of provider networks.