Insurers operating on the public insurance exchanges for individuals will be filing proposed 2015 premium rates over the next month. Early data out of Washington State indicates that anxiety over double-digit rate increases may be unfounded.
In at least one state, 2015 health insurance premium increases on the new public exchanges for individuals will be below rate increases experienced in recent years.
Washington State released proposed premium rates last week. The average proposed rate increase for individual health insurance policies offered inside and outside the state's exchange, Washington Healthplanfinder, is 8.25 percent. The average proposed rate increase for the eight insurers operating on the exchange is 5.4 percent.
Final 2015 HIX Rule Includes Measures to Stabilize Premium Rates
The proposed premium rate increase for the state's entire individual market is the lowest requested rate hike in seven years, according to the Washington State Office of the Insurance Commissioner. And there will be more insurers offering health plans through Washington Healthplanfinder next year, with at least three new carriers vying to offer policies on the exchange.
"I'm pleased to see the health insurers show an increased interest in the individual market and to see rates come in relatively low," Insurance Commissioner Mike Kreidler said in a media statement last week. "Consumers certainly deserve more choices, but we will scrutinize the proposed rate changes very carefully."
Interpreting Washington State Data
The proposed 2015 premium rate changes from insurers operating through Washington Healthplanfinder are as follows:
- Bridgespan Health Company: +1.7 percent
- Community Health Plan of Washington: +8.4%
- Coordinated Care Corporation: +11.2%
- Group Health Cooperative: +11.2%
- Kaiser Foundation Health Plan of the Northwest: +0.57%
- LifeWise Health Plan of Washington: +8.9%
- Molina Healthcare of Washington Inc.: -6.8%
- Premera Blue Cross: +8.1%
Downward Pressure
Molina Healthcare of Washington is the only insurer operating on Washington Healthplanfinder that proposed a premium rate decrease for 2015. In Molina's premium rate filing with the insurance commissioner's office, the carrier said two factors were responsible for downward pressure on its rates: the expectation of a rosier exchange risk pool in 2015 and the slowing pace of medical inflation.
"Molina expects the overall acuity of the 2015 Marketplace risk pool to improve relative to the acuity Molina assumed for the 2014 Marketplace risk pool," the carrier states in its premium rate filing.
"The increase in penalties for not purchasing health insurance as well as more public familiarity with the Marketplace should lead to improvements in the acuity of the risk pool in 2015 compared to 2014."
Molina, which is a managed care organization that provides healthcare services for more than 400,000 Washington state residents eligible for Medicaid, Medicare, and Washington Healthplanfinder, says it anticipates a reduction in 2015 medical inflation based on its "Medicaid claims experience."
Upward Pressure
Coordinated Care Corporation and Group Health Cooperative requested the largest 2015 premium rate increases on the Washington state exchange, with each seeking an 11.2 percent hike.
In its proposed premium rate filing, Coordinated Care cited several factors that are expected to create upward pressure on 2015 premium rates, including increased utilization of medical services, new taxes and fees on insurers set to go into effect in 2015, and changes in the reinsurance program for the individual exchanges.
"Both the fee charged and the expected benefits will be reduced from 2014 to 2015," Coordinated Care said of the reinsurance program changes.
National Premium Rate Expectations
From the national perspective, premium rate hikes in the public individual exchanges will likely be moderate in 2015, according to John Holahan, PhD, a fellow at the Urban Institute in Washington, DC.
"There will be more plans, not less, and more enrollees. As the numbers increase, the risk pool looks better," Holahan said, adding insurers have strong incentives to offer policies on the individual exchanges next year. "If you were attracted to it in 2014, there's even more reason to be attracted to it in 2015."
He also said fears that previously uninsured exchange beneficiaries would have high medical service utilization rates appear to be overblown. "Deductibles are fairly high, so you're not likely to see a spike in utilization."
Exchanges in states such as New Hampshire, Vermont, and West Virginia are at risk of double-digit premium rate increases due to a lack of competition, he said: "There are a number of markets that aren't particularly competitive that you worry about."
Cori Uccello, senior health fellow at the American Academy of Actuaries, said exchanges nationwide face underlying upward pressure on premium rates. "Every year, health spending goes up, with or without the Affordable Care Act. That's going to be factored in and put upward pressure on rates."
While inflation in medical service costs will affect all insurers operating on the exchanges, there are a host of state-specific market factors that will result in a wide variation of HIX rate increases nationwide, Uccello said. "Overall, rates are going to vary by state and by insurers in states. I really think there's going to be a lot of variation."
Christopher Cheney is the CMO editor at HealthLeaders.