Open enrollment for the health insurance marketplace begins this November. As a result, health insurers are filing their proposed health insurance premium rates for 2015. To examine how rates may change for consumers buying policies in 2015, we reviewed filings and news reports from 12 states where proposed rates have received media attention. For each state, we looked at overall proposed premium rate changes, which are an average for each insurer. A consumer’s actual premium increase or decrease may be higher or lower than the average depending on age, location, and plan choice. Here are five trends that we noticed:
1. In 9 of the 12 states we examined, health insurers proposed to decrease premium rates for some plans.
And in all states, the size of proposed premium increases varied greatly among insurers. Of course, because not all insurers (or all plans offered by a single insurer) are lowering premiums, consumers who want the lowest premium rates will still need to shop around once open enrollment season begins in November.
- Nine states (CO, CT, DC, IN, KY, MD, MI, OR, and WA) have at least one insurer in each state’s individual market who propose to reduce premiums for some plans in 2015 (see table below).
- In the other three states (ME, VA, VT), overall proposed premium increases varied considerably. Proposed premium increases in Maine were quite small (ranging from 0.1 percent for Maine Community Health Options to 3.1 percent for Anthem) and increases were also modest in Kaiser Health Plan in Virginia (3.3 percent).
|State||Insurer with lowest overall premium increase||Premium increase amount||Insurer with highest overall premium increase||Premium increase amount||Insurer with highest number of enrollees||Premium increase amount||Rate filing source||Additional source|
|CO||New Health Ventures||-22.00%||Denver Health||17.50%||HMO Colorado (Anthem)||-5.10%||Source||Source 2|
|DC||Aetna||-0.20%||CareFirst Blue Choice||9.40%***||CareFirst Blue Choice||9.40%||Source|
|IN||Coordinated Care||-3.20%||MDwise||35.00%||Not Available||Not Available||Source|
|KY||Anthem Health Plans of KY||-3.06%||Anthem||12.8%***||Not Available||Not Available||Source||Source 2|
|MD||Kaiser||-12.10%||CareFirst||30.20%||CareFirst Blue Choice||22.80%||Source|
|MI*||Molina Healthcare of Michigan||-21.60%||Humana Medical Plan of Michigan||17.60%||Blue Cross Blue Shield||9.70%||Source|
|OR||Oregon’s Health Co-op||-21.00%||Time Insurance Company||28.00%||Moda||12.50%||Source|
|WA||Molina Healthcare of Washington Inc.||-6.80%||Time Insurance Company||26.00%||Premera (including Lifewise)||Premera 8.1%; Lifewise 8.9%||Source||Source 2|
|VA*||Kaiser||3.30%||Carefirst Blue Choice||14.90%||Anthem HealthKeepers*||8.5%||Source|
|VT||Blue Cross Blue Shield||9.80%||MVP||15.40%||Blue Cross Blue Shield||9.80%||Source|
Information current as of July 10, 2014
*Reported in the news as cited. We were not able to search the filings.
**Originally filed as 3.1%, reduced to 2.9% on 6/26/14.
***Originally filed at a higher rate and later withdrawn.
2. The new pool of Affordable Care Act enrollees is forcing insurers to make more guesses than ever about medical trends.
In a rate filing, each insurer documents its assumptions about medical trends. Because many of the people who enrolled in 2014 were first-time buyers of health coverage, insurers do not yet know how much health care this new population will use and are being forced to essentially guess about usage trends for 2015.
These projections vary: For instance, in Connecticut, Anthem projects that consumers will use more health services in 2015 partly because the newly insured have pent-up demands for services. But another insurer, Healthy CT, is taking the opposite view, betting that pent-up demand will no longer exist in 2015 because the newly insured took care of their medical needs in 2014.
Insurers have different guesses about medical costs, as well. In Oregon, for example, Kaiser and Moda expect medical costs to rise by just over 5 percent while Regence Blue Cross and Bridgespan expect costs to rise by 7.2 percent. And in Connecticut, Anthemcites the cost of new Hepatitis C drugs as one reason that it expects its medical costs to rise by 8.4 percent.
The prices that insurers must pay for medical care also vary. For instance, hospital prices are higher in some communities, and office space and the cost of living are among price drivers for other services. But insurers also negotiate price and, in several states, insurers who are decreasing their premium rates note that they plan to negotiate with providers in order to lower prices.
To better gauge whether insurers’ predictions of medical costs are reasonable, consumer groups should compare the rate filings of several insurers in the same area.
3. 2015 Health insurer pricing is critical in influencing how many enroll.
We know that, in 2015, pricing will make a difference to health plan enrollee demographics: Insurers who price their plans too high will not attract many new enrollees and, in particular, the young and healthy among them. In rate review comments, consumers should point out that, by pricing a plan more reasonably, insurers may get a healthier mix of enrollees and thus be better able to avoid rate increases.
4. There is evidence that the Affordable Care Act’s provisions are making a dent in health insurance premium increases.
Competition. The plan comparisons and availability of financial assistance are increasing the pool of potential enrollees for health insurance companies, thus creating a more competitive marketplace. This completion is, in turn, driving down rates.
Insurers are complying with the health law’s requirement to lower administrative expenses. Health insurers are limiting their administrative expenses because medical loss ratios require them to spend at least 80 percent of premium dollars on medical care.
Risk adjustment, reinsurance, risk corridors, and risk corridors can help keep rates in check. Known as the three Rs (explained below), these provisions are helping to protect insurers against losses (and thus prevent the need for health insurance premium rate increases) if insurers enroll a large pool of unhealthy people. Insurers should be taking these into account in their projections.
- Risk adjustment collects funds from insurers in the health insurance markets that cover healthier people. The process then redistributes those funds to plans that have sicker enrollees.
- Risk corridors compensate health plans that have higher medical claims than they projected.
- Reinsurance helps to cover the costs of enrollees with high health insurance claims.
Rate review has helped regulators examine and reject unreasonable premium rates and given the public an opportunity to comment.
5. Consumers may want to re-examine their plan choices during open-enrollment season, beginning in November 2014, even if they get premium assistance.
Many consumers receive financial help from the government to pay for their premiums. However, a recent analysis by Avalere Health points out that these consumers may still need to switch plans in 2015 if they want to pay about the same price. This is because the government bases its price protections on the cost of the second-lowest priced silver plan in an area and, according to the proposed rates, those plans will change in many states. The result? The relative prices of other plans may change as well, and consumers with higher-priced silver plans will be charged more for health insurance.
There is still time for consumers and advocates to challenge unreasonably high health insurance premium rates proposed by some insurers.
Switching plans to get a lower rate is not easy for consumers. Many consumers like the providers in their plans and may be reluctant to switch. In most states, laws require state regulators to approve proposed rates before they go into effect. A push from consumer groups can spur regulators to challenge prices that are too high. To learn more about the rate review process and how to comment effectively, read our five-part series here.