High Premiums in Nongroup Insurance Markets

A patient pays a receptionist at a doctors office.

Expensive health insurance premiums are impacting certain parts of the country but can be remedied by policy proposals.



The Issue

The authors note that premiums are not high in all areas, and that many areas with large recent premium increases reflect needed corrections to very low premiums in the early years of reform. However, in sources with high premium levels, the causes differ, as should appropriate solutions.

Key Findings

  • The first potential problem is that sicker people are more likely to enroll in marketplace plans;

  • The second, premiums tend to be higher if an insurer or provider group has a monopoly in their area; and

  • Third, inadequate risk adjustment, i.e., moving premium dollars from insurers with low-cost enrollees to insurers with high-cost enrollees, may also be a factor leading to high premiums in some areas.


A few of the policy fixes that the authors describe include providing more financial assistance to purchase insurance while simultaneously increasing the penalty for not having coverage to alleviate adverse selection. The authors note that placing a ceiling on how much doctors and hospitals are paid for their services could help cap premiums in areas with high insurer or provider concentration.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.