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Few health insurance options leave Americans no choice but to pay high prices

·3-min read
Few health insurance options leave Americans no choice but to pay high prices
Few health insurance options leave Americans no choice but to pay high prices

With open enrollment in full swing, millions of Americans are busily reviewing their health insurance options.

The problem is, there’s just not that many.

The market for health insurance is becoming less and less competitive, a new study shows. And fewer choices means higher costs for consumers, many of whom are already struggling to afford their premiums.

Here’s why Americans are so short on options and what you can still do to keep your health care costs low.

Few insurers dominate

Anthem sign
Jonathan Weiss/Shutterstock

Almost three-quarters of metropolitan areas in the country are suffering from low competition, according to the latest report from the American Medical Association (AMA).

In fact, individual insurers often dominate their local fiefdoms, controlling 50% market share or more. That’s the case in almost half the country.

“These markets are ripe for the exercise of health insurer market power, which harms consumers and providers of care,” the study says.

The problem is largely the result of health insurers merging with or buying out their competition. While the government sometimes stops these moves — like it did in 2017 when Anthem tried to buy Cigna to become the biggest health insurer in the country — many more go through.

When an insurer dominates a market, AMA says, premiums are higher and the quantity of coverage is lower.

Since 2011, average family premiums for employee-sponsored health insurance plans have jumped 47%, a survey from the nonprofit Kaiser Family Foundation (KFF) says. That’s more than wages (31%) or inflation (19%).

Some states have it worse

Delaware map
SevenMaps/Shutterstock

Millions of Americans who don’t get coverage through an employer or a government program like Medicare can pick and choose their insurer through the Affordable Care Act (ACA) marketplace.

However, depending on where they live, they won’t exactly have a wealth of options.

This year, states have an average of five insurers each — up from a low of 3.5 in 2018 but below the peak of six in 2015.

Delaware only has one insurer offering plans on the state’s health insurance marketplace. In another 13 states, there’s only two.

And insurers typically don’t participate statewide. Rural areas tend to have fewer insurers.

What can you do if you don’t have many options?

Man smirks at computer
fizkes/Shutterstock

With open enrollment ending Jan. 15 — or Dec. 15, if you want your new coverage to start on Jan. 1 — now is the time to get to work.

Start by investigating whatever options you do have for affordable coverage.

Even if you’re only looking at a few insurers, that can mean a lot of different plans — so consider using a quote comparison site to quickly find cheap health insurance.

Next, you’ll want to look for other ways to save money to afford to offset your high insurance premiums.

  • Score a lower mortgage rate. Borrowing costs are still historically low. If you’re a homeowner, consider refinancing your home loan. You may be able to save hundreds of dollars each month and thousands over the life of your loan.

  • Slash your debt. If you’ve relied on credit cards to get through the pandemic, you may want to roll that high-interest debt into a consolidation loan. You may be able to reduce the amount of interest you pay and wipe out your debt faster.

  • Stop overpaying online. Even if you’ve cut back on extras, you’re still going to need to shop for basic household supplies. Try using a free browser extension that scours the internet for low prices and coupons before you check out.

  • Take a low-stakes approach to investing. Participating in the runaway stock market isn’t just for the rich and powerful. You can earn some returns of your own using a popular app that helps you invest your “spare change” from everyday purchases.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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