Aetna Inc. (AET), WellPoint, Inc. (WLP), CIGNA Corporation (CI) – Obamacare Health Insurance Premiums: Lower Than Expected?

Concerns on the horizon
Clearly this study is a big boost in favor of Obamacare. If these figures hold true, then dissenters to the plan will have little to complain about, with coverage for many people expanding and clearly more people than before the PPACA being insured. However, there are still variables that could derail this calculation and push premium costs higher.

For one, KFF’s study compared costs in 17 states plus the District of Columbia (i.e., from the states that have reported their insurance rate info). These 18 states/regions include 11 states that have chosen to take charge of their own state-run exchanges. This means that a majority of the yet uncalculated states are part of the federally run health exchange program that chose not to participate. It’s quite possible that costs could adjust upward in these non-committal states if fewer insurers choose to participate.

Second, as the study notes, in many states, one or just a very small handful of insurers controls a vast majority of the insurance market. Transparency should help curb any blatant premium overpricing, but in states where just two or three insurers operate, there’s nothing that stops these insurers from boosting premiums across the board. Take, for example, Rhode Island, Maine, Montana, Vermont, South Dakota, and Connecticut, which, according to KFF’s study, only have two or three insurance companies operating within their state. Sure, there are multiple plan options within the silver and bronze category — it’s not as if it’s a one-and-done take-it-or-leave-it type of health insurance plan — but in a consumer-driven market, competition breeds better pricing. With so few insurers still controlling individual states, premium pressures may still prove ongoing.

The bottom line
With just a hair over three weeks to go before individuals are given the green light to purchase insurance on state-run exchanges, it’s safe to say that the time for speculation is winding down. With disapproval of Obamacare touching its highest levels in two years this summer, KFF’s new study couldn’t have come at a better time. As an investor, I’d look for insurers and drugstores to use this news to their advantage in helping the public to become knowledgeable about the new law and to sign up for health insurance.

The article Obamacare Health Insurance Premiums: Lower Than Expected? originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends WellPoint.

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