USE CASE: Competition in the Health Insurance Exchange

Click here to listen to former Duke Students, Matthew Panahans and Eli Liebman chat with CIVHC’s CMO, Tamaan Osbourne-Roberts, about their project.


Graduate students at Duke University.

Understanding the effects of competition in insurance markets is important for policy and the welfare of Colorado residents. It can help explain the geographic price variation across the state, as well as the effect of insurer competition on premiums, and to what extent insurer competition is beneficial across counties. The goal of this project was to investigate the effect of Colorado’s health exchange on healthcare utilization, and how the variation in exchange premiums across the state was affected by the interaction of market structure, selection, and location.

Benefit to Colorado: The CO APCD offered a rare insight into market-wide aspects of the Affordable Care Act (ACA) Health Insurance Marketplaces. The Duke students had three main findings:

  • Healthcare utilization for individuals in the non-group market (including plans sold on Connect for Health Colorado) is higher than in the employer- sponsored insurance market.
  • These patterns reflect a large amount of adverse selection – that higher risk individuals had a higher propensity to purchase health insurance in 2014.
  • Narrow networks are an effective tool that insurers can use to negotiate lower prices with healthcare providers. 

This information provides insights into how insurance companies can lower costs and improve outcomes.