Bigger might be better, but it can also be pricier—at least when it comes to Obamacare. A new analysis found that the largest insurer in each of the states served by HealthCare.gov raised their prices in 2015 much more sharply—by an average of 10 full percentage points—than smaller competitors on that federal Obamacare marketplace. Those steeper price hikes for monthly premiums didn't seem warranted by the level of health claims made by customers of those bigger plans, according to the study published in the journal Technology Science, by Harvard University's Institute for Quantitative Social Science. They also stand in contrast to the belief that economies of scale will result in lower prices.



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The Harvard study's results come after a separate piece of analysis released by HealthPocket earlier this month came in "contrary to expectations." The insurance comparison company found that in a dozen major counties across the U.S., a popular kind of health insurance plan tends to be significantly more expensive—by an average of 12 percent—when offered by health-care providers such as hospitals, as opposed to traditional insurers. That stands in contrast to common wisdom, because if doctors work for the provider whose health plan would be covering those procedures, the theory goes, there would be less of an incentive to inflate the costs incurred per patient by recommending unnecessary tests, surgeries and other procedures. "Enter this as another instance where a 'silver bullet' for reducing American health-care costs has been called into question," said Kev Coleman, head of research and data for HealthPocket.

In the same vein, the findings published in Technology Science by Harvard's Grace Gee and co-author Eugene Wang suggest that "the largest on-exchange issuers may be in a better position to practice anti-competitive pricing compared to their same-state counterparts," according to the study.

"This really raises questions about the recent Anthem, Cigna and Humana mergers," she said. Their analysis looked at the 34 states that were served by HealthCare.gov when insurers began selling plans that first took effect in 2014, and how prices for those plans changed for 2015, the second year of Obamacare enrollment. The largest insurer, or issuer, was determined by market share. "On average, the largest issuers raised rates by 23.9 percent, while the other issuers only raised rates by 13.7 percent," the authors wrote. That means the largest issuer in each state had, on average, a 75 percent higher premium increase compared to other insurers in the same state, the report found. The study also found that the rate increases of larger insurers affect "a larger portion of plans" than did the rate increases of their small competitors. It is common for an individual insurer to offer multiple health plans, at different price points, on government-run Obamacare exchanges. Gee told CNBC that the findings were "pretty consistent" across the states. "It's not like based on one outlier," said Gee, who, along with her co-author, has started a data-driven, research-based online insurance broker and comparison site called HoneyInsured.

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Asked why the largest insurers were raising their rates more steeply than their competitors, Gee said, "I don't have a good explanation for that." But the article detailing the study said there may be "other possible justifications for the higher premiums" that weren't covered by the scope of the analysis. "Perhaps the largest insurers in each state expanded their network [of health providers covered by a plan] faster than other issuers, so that premium increases reflect more accessible or higher-quality medical care," the article said. Another possibility is that the higher premium increases are the result of the biggest insurers having higher rates of enrollment of older customers, who "have higher variance in their medical utilization costs." A third reason could be that large insurers may have been more conservative than smaller ones in how they priced their plans initially, because they had less need to attract new customers, and because they had little actual information about health-care use by their Obamacare customers when they had to set prices for 2015. Because open enrollment in Obamacare plans ran well into the spring of 2014, the first year of such plans, insurers had very little time to craft 2015 proposed rates, which had to be submitted by last summer. One of the insurers mentioned in the study, Premera Blue Cross, said the 37 average rate increases it obtained for the Alaska market on HealthCare.gov for this year were justified given a number of factors in that state, including the relatively small size of the individual market there and an influx of disproportionately less health customers. "We've seen a large influx of individuals with very significant medical needs and related medical costs purchasing new coverage under" the Affordable Care Act, the company said in a blog post last year explaining its rate hike requests. "In short, there are not enough healthy members in Alaska's individual market to offset the cost of members with very high medical costs."

Premera spokeswoman Melanie Coon said the company only had one competitor on HealthCare.gov in Alaska—Moda—and noted that while Moda's rate hikes were "a bit less than us," it was "not by much."

