You’d be hard to replace: Provider competition in narrow network insurance markets

This field study sought to better understand the evolution of health insurance competition in the health insurance exchange marketplaces in five states: California, Michigan, Florida, North Carolina, and Texas. This summary highlights key findings from each of the states and offers a series of testable hypotheses about the evolution of these markets. Four broad themes emerged from the analysis. First, health insurance markets are local, largely due to the necessity to establish local networks of health care providers. Second, higher than expected claims costs were the source of much of the turmoil in the marketplaces over the initial 4 years. Third, there has been a substantial shift toward narrower networks of providers, largely achieved by eliminating preferred provider plan options. Fourth, hospital and physician competition is essential for a robust and competitive insurer market.