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Early Exchange Outlook 2015

Ceci ConnollyStates in more than half the nation have reported individual market premium rate requests for 2015, making this an opportune time to assess how the second year of the ACA’s new marketplaces is shaping up.

With rate filings in for 27 states plus the District of Columbia, the early word on 2015 appears to be expansion. At least 15 of the 28 jurisdictions in 2015 will offer new individual plans this year. Thirty-seven of the 176 health plan filings are new, according to analysis by PwC’s Health Research Institute (HRI).

Major national insurers such as UnitedHealth Group, as well as newbie Consumer Operated and Oriented Plans (Co-Ops), plan to add both products and states when exchange open enrollment begins in the fall. In Virginia, five new plan bids have been submitted to the state; Washington, Arkansas and Tennessee show three new plans each.

UnitedHealth’s CEO Stephen J. Helmsley estimates that UnitedHealth will sell on public exchanges in about two dozen states. In short, the ACA’s subsidized exchange markets represent growth opportunities for the health sector.

At the same time at least three non-profit health Co-Ops will move into additional markets. As of late April, Co-Ops operating in 23 states had 400,000 members, according to the National Alliance of State Health Co-Ops. Not every Co-Op drew big numbers, especially those in states such as Maryland, where the online marketplace never really got off the ground. And it’s far too early to say how many new entrants will be left standing as plans are forced to pay back $2 billion in federal loans over the next several years.

In terms of cost, our HRI analysis found the average monthly premium across all plans in 2015 was $384, before any subsidies are applied. Individuals earning up to 400% of the Federal Poverty Level, or about $47,000 this year, are eligible for government subsidies. Last year individuals who purchased coverage through the federal exchange saw their out-of-pocket premium costs drop by about 76%, from $346 to $82 per month with tax credits, according to the Department of Health and Human Services.

The premium rate proposals, which must be approved by state insurance commissioners, range from a 23% reduction (Arizona) to a 36% increase (Nevada). Overall the average proposed rate increase is holding steady at 7.5%, well below the double-digits many feared. (Click here for an interactive 50-state HRI map.)

Importantly insurers have factored in additional costs for 2015, such as a higher industry fee (up from $8 billion this year to $11.3 billion) and a lower federal reimbursement rate for reinsurance of high-dollar claims.

California, the largest state in the nation with 1.4 million enrollees in 2014, is reporting a weighted average increase of around 4.2%. Officials note that some plans have proposed average rate decreases of 8.5%.  Anthem Blue Cross, which has about one-third of the California market this year, has said it requested an increase of less than 10%, but many Blue Cross Blue Shield plans in other states are seeking double-digit increases.

In New York, another closely-watched state, officials recently announced a weighted average rate increase of 13% in 2015. Newcomer Oscar, a technology-based insurer, proposed a 5.5% rate increase for 2015. Arizona has the lowest premium filing so far, at $211 a month. The District of Columbia, with an unusually large percentage of gold and platinum shoppers (think lawyers, lobbyists and members of Congress) has posted an average rate request of $352.

Among states that have reported actual premiums, Indiana holds the dubious distinction of having the highest average premium rate, at $514, and the highest average increase at 15.4% for six plans. It is also the only state so far with a requested monthly premium above $600. (Note: Louisiana’s posted 19% average increase appears to be the highest, but the state is only reporting requests above 10%).

Colorado has the widest range of rate proposal requests across 12 different carriers:  from a 22% reduction to a 35% increase. Proposed premiums range from $288 to $529, with an average of $411.

Let’s just say, it pays to shop around.

Ceci Connolly is the managing director of PwC’s Health Research Institute.

Caitlin Sweany is a senior manager at PwC’s Health Research Institute

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jimCeci ConnollyCarol JonesMikeFromBatonRougeCeci Connolly Recent comment authors
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jim
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jim

I liked my plan… I liked my doctor. No, I have neither. Thanks.

Ceci Connolly
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Ceci Connolly

Carol,
Sorry to hear about that. Our data is averages for each state. We are seeing wide variation. It is super important for you to shop around again this year as there’s a good chance you can find a better deal. The exchanges are set to open this Friday, Nov. 15 — Feb. 15.
Good luck!

Carol Jones
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Carol Jones

Could you be wrong about AZ rates? Today (10-27-14) I received notice that my 2015 rates will increase by 31% from the 2014 rate. The insurance company did not indicate if the deductible of $4,600 would also increase, but I probably should assume it will. I am a non-smoker.

MikeFromBatonRouge
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MikeFromBatonRouge

Your article has the note: (Note: Louisiana’s posted 19% average increase appears to be the highest, but the state is only reporting requests above 10%).

As far as I can tell – this 19% increase that is being trumpeted by the republicans here came from a single insurer. This seems awfully dishonest. Any further info on Louisiana? Thanks

Ceci Connolly
Guest

Map update: 29 states plus DC and latest national average is 8.2%. Variation across plans and states.
http://www.pwc.com/us/en/health-industries/health-research-institute/aca-state-exchanges.jhtml
Roll over a state for detailed info.

Ceci Connolly
Guest

Good piece in CapitalNY, especially the chart. Another good read from @citizencohn via The New Republic. Of course, state insurance commissioners will get their say in the next few months and we really won’t have a strong sense of this market for a few more years.

JeanneFromClearhealthcosts
Guest

Excellent piece. My acquaintance Dan Goldberg over at CapitalNY just sent a link to their in-depth look at the NYState filings, with a terrific graphic showing rate increase and market share:

http://www.capitalnewyork.com/article/albany/2014/08/8549028/behind-new-yorks-2015-health-insurance-rates

Dan Goldberg
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Dan Goldberg

Check out Capital New York’s story on NY’s proposed rate increases for 2015

http://www.capitalnewyork.com/article/albany/2014/08/8549028/behind-new-yorks-2015-health-insurance-rates

John Peter
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Yes, each the insurance and risk passageway programs can end in a very few years. confine mind, however, that insurers square measure (or ought to be) actively designing for these phase-outs

allan
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allan

Thanks for your comments. I can only listen to them without comment because things are in such flux, but the underlying principles being used IMO will increase cost/benefit. Government intervention doesn’t have the boundary lines seen in the private markets.

Another thing that troubles me is the ease with which the California Information Exchange seems to have in its implementation. There doesn’t seem to be much concern for patient privacy.

Barry Carol
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Barry Carol

I’m told that individual insured members can opt out of the HIE if they’re concerned about privacy issues.

allan
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allan

Are the individuals adequately informed of what the HIE is and does that refusal come with a stigma attached?

On another note remember that water and data are very similar in certain respects. Man can drown in both.

Barry Carol
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Barry Carol

allan, I don’t have a good answer for you on the outlook for health insurance premiums in CA. My guess about the cause of the large premium increases experienced by some individuals in the CA individual insurance market is that much of it resulted from more comprehensive coverage required to comply with the mandated benefits package and some may relate to the 3 to 1 limit on age rating. For insurance policies purchased through the new exchanges, Wellpoint, on its 2nd quarter earnings conference call, pronounced itself satisfied with its performance so far. It noted that the members who bought… Read more »

Barry Carol
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Barry Carol

Is there any data around how much the health insurance industry will collect this year from the 3R’s – risk adjustment, reinsurance and risk corridors vs. how much it will collectively pay into the system? Except for risk adjustments, I think this program phases out by the end of 2016. As noted, the industry tax will increase 40% in 2015. With pretax profit margins in the 3%-5% range at best, significant rate increases may be necessary over the next few years to make the exchange business sustainable.

allan
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allan

Barry, when discussing total healthcare costs we have a tendency to break things up and then report those things that look favorably or unfavorably on the program based upon our bias. You have done a good job here of centering the expectations. But, in this report we are dealing with the exchanges where it seems you feel that the % increase in California is not reflective of the actual cost. While reading this blog I am reminded of an LA Times article the other day dealing with premiums outside of the exchanges. http://www.latimes.com/business/la-fi-insurance-rates-20140730-story.html I don’t have any way to put… Read more »

Caitlin Sweany
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Caitlin Sweany

Yes, both the reinsurance and risk corridor programs will phase out in a few years. Keep in mind, however, that insurers are (or should be) actively planning for these phase-outs, so my guess is that they’re already factoring those in — at least in part — to exchange premiums.

Fairfax Voter
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Fairfax Voter

I wonder about the “five new plans” in Virginia. There’s a company called Innovation Health (partnership of Aetna plus Inova hospitals) that is not renewing any of its 2014 plans, according to its filing with the state — but is staying in the exchange and offering a new batch of plans. If the “five new plans” are just the replacements for the 2014 plans, then I’d say Virginia is staying put, not expanding. Hope I’m wrong, but just FYI.

Caitlin Sweany
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Caitlin Sweany

Yep, it’s true that the new plans in VA did replace the older ones — they are new bids, however. Insurers are clearly switching things up a bit this year.

Caitlin Sweany
Guest
Caitlin Sweany

Yes, in fact we’ve done research at HRI showing that public exchange premiums (pre-subsidy) are comparable to — and in some cases lower than — employer-sponsored insurance. http://pwc.to/1qNRy2t

Employers have to consider mandate penalties, recruitment/retention, etc. when deciding whether to send employees to the public exchanges. Not a clear-cut decision for many.

Saurabh Jha
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Saurabh Jha

Interesting.

If the trend continues and there is more suppleness in the individual market, it might get those covered by ESI to take more notice.

Alternatively, they may be two insurance tiers that are not supposed to meet.

Caitlin Sweany
Guest
Caitlin Sweany

That’s a good point. We do expect to see some movement from employers into the public exchanges over the next few years, especially as rates stabilize.

Ceci Connolly
Guest

First movers will be employers with large percentage of low-wage workers, eligible for subsidies — assuming the subsidies withstand legal challenges and perhaps Congressional action.

Saurabh Jha
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Saurabh Jha

That seems substantially less than ESI, which begs the question why are more people not jumping on to the exchanges, or will they; or is there a catch?