States 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