Analysis of 2016 Premium Changes and Insurer Participation in the Affordable Care Actfs Health Insurance Marketplaces
Jun 24, 2015 - The Henry J. Kaiser Family Foundation
Cynthia Cox, Rosa Ma, Gary Claxton, and Larry Levitt
Introduction
An updated analysis of 2016 premiums in Affordable Care Act marketplaces is
available here.
________________________________________________________________
Premium growth in the Affordable Care Actfs Health Insurance Marketplaces has
been an area of significant interest, as this is one of the most tangible and
measurable indicators of whether the ACA is working to keep health insurance
affordable. The ACAfs rate review provision requires premium increases over ten
percent to be made public. As a number of individual market insurers are
requesting 2016 increases well above 10 percent, concern has been raised over
the affordability of premiums in the coming year. However, these increases are
not necessarily representative of the range of products from which consumers
will be able to choose, and similar data is not widely available for the plans
with moderate increases or decreases.
This brief presents an early analysis of changes in the premiums for the
lowest- and second-lowest cost silver marketplace plans in major cities in 10
states plus the District of Columbia, where we were able to find complete data
on rates for all insurers. It follows a similar approach to our September 2013 and 2014 analyses of Marketplace premiums.
In most of these 11 major cities, we find that the costs for the lowest and
second-lowest cost silver plans – where the bulk of enrollees tend to migrate –
are changing relatively modestly in 2016, although increases are generally
bigger than in 2015. The cost of a benchmark silver plan in these cities is on
average 4.4% higher in 2016 than in 2015. These premiums are still preliminary
in some cases and could be raised or lowered through these statesf rate review
processes, and it is difficult to generalize to all states based on this small
sample of states where all rate filings are available. We also find that the
number of insurers participating has stayed the same or increased in 9 states,
while insurer participation decreased in Michigan and the District of
Columbia.
Approach
In preparation for open enrollment for coverage in 2016, insurers filed
premiums with state insurance departments. States vary in whether and when they
release those filings. Our analysis is based on the 10 states plus the District
of Columbia where we were able to find comprehensive filings or other
information about the rates of the lowest-cost plans. Other states have released
summary information, but not sufficient detail to identify the lowest-cost
silver plans. In many cases, premiums are still under review by insurance
departments and may change prior to the start of open enrollment.
We examine premiums in the rating area that includes a major city in each
state. Premiums vary significantly within states, with the rating area being the
smallest geographic unit by which insurers are allowed to vary rates. For each
rating area, we look at premiums for the two lowest-cost silver plans. We focus
on silver plans because they are the basis for federal premium subsidies and
because these are the plans that most marketplace enrollees (68%) have chosen.
Changes in Lowest Two Silver Plans
Across the 11 cities we examined, the premium for the second-lowest-cost
silver plan in the Marketplace – before accounting for any tax credit – is
increasing by an average of 4.4%. By contrast, in these cities, the average
change in the benchmark silver plan was -0.6% from 2014 to 2015. (The nationwide
average increase in this plan was 2% from 2014 to 2015).
Silver Premium Percent Change from Previous Year
Benchmark premium changes in 2016 vary significantly across the cities,
ranging from a decrease of 10.1% in Seattle, Washington to an increase of 16.2%
in Portland, Oregon.
Connecticut |
2 (Hartford) |
$322 |
$328 |
2.0% |
$208 |
$208 |
0.2% |
DC |
1 (Washington) |
$242 |
$248 |
2.8% |
$208 |
$208 |
0.2% |
Maine |
1 (Portland) |
$282 |
$290 |
2.9% |
$208 |
$208 |
0.2% |
Maryland |
1 (Baltimore) |
$235 |
$246 |
4.6% |
$208 |
$208 |
0.2% |
Michigan |
1 (Detroit) |
$230 |
$226 |
-1.8% |
$208 |
$208 |
0.2% |
New Mexico |
1 (Albuquerque) |
$171 |
$190 |
11.0% |
$171* |
$190* |
11.0%* |
New York |
4 (New York City) |
$372 |
$374 |
0.5% |
$208 |
$208 |
0.2% |
Oregon |
1 (Portland) |
$213 |
$248 |
16.2% |
$208 |
$208 |
0.2% |
Vermont |
1 (Burlington) |
$436 |
$476 |
9.2% |
$208 |
$208 |
0.2% |
Virginia |
7 (Richmond) |
$260 |
$288 |
10.8% |
$208 |
$208 |
0.2% |
Washington |
1 (Seattle) |
$254 |
$228 |
-10.1% |
$208 |
$208 |
0.2% |
Average % change from 2015 |
|
|
4.4% |
|
|
1.2% |
SOURCE: Kaiser Family Foundation analysis of 2016 insurer rate
filings to state regulators.
NOTES: Rates are not yet final and subject to review by the state.
Oregon rates reflect preliminary changes from the state. *Unsubsidized
Albuquerque premiums are so low that a 40 year old making $30,000 per year
would not qualify for a premium tax credit in 2016 |
As shown in the final column of the above table, the amount paid by an
enrollee after accounting for the premium tax credit will depend on his or her
income and family size. In 2015, a 40-year-old single enrollee making $30,000
per year would have paid $208 per month in most areas of the country, and a similar person would pay
approximately the same in 2015. (Although premium caps are increasing for 2016, the poverty guidelines are also
changing such that a single person making $30,000 will be at a slightly lower
percent of poverty than he or she would be this year. These two changes in
effect cancel each other out, leaving monthly payments for the benchmark plan
very similar from year-to-year.)
Similar patterns can be seen for the lowest-cost silver plan in each city. On
average, the premium for the lowest-cost-silver plan in these cities is
increasing by 4.5% from 2015 to 2016, ranging from a decrease of 4.2% in
Seattle, Washington to an increase of 19.0% in Richmond, Virginia.
Connecticut |
2 (Hartford) |
$321 |
$327 |
1.9% |
$207 |
$207 |
0.1% |
DC |
1 (Washington) |
$239 |
$244 |
2.1% |
$205 |
$204 |
-0.6% |
Maine |
1 (Portland) |
$275 |
$284 |
3.4% |
$201 |
$202 |
0.7% |
Maryland |
1 (Baltimore) |
$226 |
$232 |
2.6% |
$199 |
$194 |
-2.2% |
Michigan |
1 (Detroit) |
$219 |
$210 |
-4.2% |
$197 |
$192 |
-2.3% |
New Mexico |
1 (Albuquerque) |
$167 |
$186 |
11.5% |
$167* |
$186* |
11.5%* |
New York |
4 (New York City) |
$372 |
$369 |
-0.7% |
$207 |
$203 |
-1.9% |
Oregon |
1 (Portland) |
$212 |
$228 |
7.7% |
$207 |
$189 |
-8.6% |
Vermont |
1 (Burlington) |
$428 |
$471 |
10.0% |
$200 |
$203 |
1.6% |
Virginia |
7 (Richmond) |
$241 |
$287 |
19.0% |
$189 |
$208 |
9.8% |
Washington |
1 (Seattle) |
$235 |
$225 |
-4.2% |
$189 |
$205 |
8.6% |
Average % change from 2015 |
|
|
4.5% |
|
|
1.5% |
SOURCE: Kaiser Family Foundation analysis of 2016 insurer rate
filings to state regulators.
NOTES: Rates are not yet final and subject to review by the state.
Oregon rates reflect preliminary changes from the state. *Unsubsidized
Albuquerque premiums are so low that a 40 year old making $30,000 per year
would not qualify for a premium tax credit in 2016 |
Active Renewal and Premium Changes
As was the case last year, the plans that had the lowest premiums in 2015
were usually no longer one of the two lowest-cost silver plans in 2016. Among
the 10 major cities where we could identify the product offered as the lowest
and second-lowest silver plan, in only one city (Portland, Maine) would a person
who signed up for either of the two lowest-cost silver plans in 2015 be able to
stay in the same plan and still be enrolled in one of the two lowest silver
plans in 2016.
Connecticut |
2 (Hartford) |
Yes |
No |
DC |
1 (Washington) |
N/A* |
N/A* |
Maine |
1 (Portland) |
Yes |
Yes |
Maryland |
1 (Baltimore) |
Yes |
No |
Michigan |
1 (Detroit) |
Yes |
No |
New Mexico |
1 (Albuquerque) |
No |
No |
New York |
4 (New York City) |
No |
No |
Oregon |
1 (Portland) |
No |
No |
Vermont |
1 (Burlington) |
Yes |
No |
Virginia |
7 (Richmond) |
No |
No |
Washington |
1 (Seattle) |
Yes |
No |
SOURCE: Kaiser Family Foundation analysis of 2016 insurer rate
filings to state regulators
NOTES: Rates are not yet final and subject to review by the
state.*The District of Columbia did not public sufficient detail to
determine whether plans are the same as those offered in 2015, but the
insurers are the same. |
This underscores the importance of enrollees actively shopping each open
enrollment period. For example, in Seattle, Washington, Bridgespan offered the
second-lowest-cost silver plan in 2015 at a premium of $254 per month for a
single 40 year-old before taking a tax credit into account. Bridgespan is
increasing this planfs rate to $286 per month for 2016, but another insurer
(Ambetter) is undercutting it and offering two lower-cost silver options for
$225 and $228 per month. An unsubsidized person enrolled in the 2015
second-lowest silver plan offered by Bridgespan would see a 12.6% increase if
she stayed in the same plan. Conversely, if she switched to the new
second-lowest silver plan offered by Ambetter, her premium would drop -10.1%
(before accounting for the relatively small effect aging up a year would have on
her premiums).
The effect of changes in the benchmark premium relative to other plans is
magnified for subsidized enrollees because the tax credit is tied to the premium
for the second-lowest cost silver plan in a given year. If the same 40 year-old
in the example above makes $30,000, she would be paying $208 per month in 2015
for the benchmark plan (offered by Bridgespan) and the federal government covers
the rest through a tax credit. In 2016, if she switches to the new benchmark
(offered by Ambetter), she would continue to pay $208 per month (assuming she
continues to have the same income and family size in 2016). However, if she
stayed in the Bridgespan plan, she would have to pay that amount plus the
premium difference between the Bridgespan and Ambetter plans, or a total of
approximately $266 (an increase of about 28%, before accounting for a relatively
small increase resulting from aging one year). To keep her lower premium, she
has to be willing to switch plans. Similar situations arise in the 9 cities
where a low-cost insurer is raising its premiums faster than other carriers, or
where a different insurer is offering lower premium.
In addition to switching plans, the person in the example above would also
have to switch insurance companies in order to avoid a significant premium
increase. Similar situations could arise for people enrolled in at least one of
the two lowest-cost silver plans in 2015 in seven out of eleven major
cities.
Connecticut |
2 (Hartford) |
No |
No |
DC |
1 (Washington) |
No |
No |
Maine |
1 (Portland) |
No |
No |
Maryland |
1 (Baltimore) |
No |
Yes |
Michigan |
1 (Detroit) |
No |
Yes |
New Mexico |
1 (Albuquerque) |
Yes |
No |
New York |
4 (New York City) |
Yes |
Yes |
Oregon |
1 (Portland) |
No |
Yes |
Vermont |
1 (Burlington) |
No |
No |
Virginia |
7 (Richmond) |
Yes |
Yes |
Washington |
1 (Seattle) |
No |
Yes |
SOURCE: Kaiser Family Foundation analysis of 2016 insurer rate
filings to state regulators
NOTES: Rates are not yet final and subject to review by the
state. |
Although switching insurance carries could help stimulate competition in the
exchange – which, to some extent, is how the premium tax credit is designed to
work – changing insurance carriers can cause challenges for some enrollees, in
particular potentially needing to change doctors (although staying with the same
carrier from year-to-year does not necessarily guarantee a consistent network of
doctors either).
Insurer Participation
On average, 7 insurers (grouped by parent company) will offer coverage in
these states in 2016, which is a similar number that participated in 2015 and an
increase from 6 in 2014. Insurer participation has increased or remained stable
in all of the states but Michigan, where the number dropped from 13 to 12 and
the District of Columbia, where the number dropped from 3 to 2. The number of
insurers participating in these statesf Marketplaces ranges from 2 in Vermont
and DC to 16 in New York.
Connecticut |
3 |
4 |
4 |
DC |
3 |
3 |
2 (Aetna exited) |
Maine |
2 |
3 |
4 (Aetna entered) |
Maryland |
4 |
5 |
5 |
Michigan |
9 |
13 |
12 (Assurant exited) |
New Mexico |
4 |
5 |
5 |
New York |
16 |
16 |
16 |
Oregon |
11 |
10 |
11 (Zoom Health entered) |
Vermont |
2 |
2 |
2 |
Virginia |
5 |
6 |
6 |
Washington |
7 |
9 |
11 (UnitedHealth and Health Alliance
entered) |
AVERAGE |
6.0 |
6.9 |
7.1 |
SOURCE: Kaiser Family Foundation analysis of 2016 insurer rate
filings to state regulators
NOTES: Filings are not yet final and subject to review by the
state. |
Discussion
Premium changes for 2016 will vary substantially across areas and across
insurers within a given region. At this time, with complete premium information
only available in 10 states plus DC, and still awaiting final reviews by state
regulators, it is too soon to draw conclusions about the premiums nationally. As
a result of the ACAfs rate review provision, data has become public on rate
increases over 10 percent, with some insurers requesting average increases well
into the double digits. However, the patterns in these 10 states and DC, where
more complete information is available, suggest that the premiums for the two
lowest-cost silver plans – where the bulk of enrollees tend to migrate – are not
necessarily increasing, and where they are increasing, the growth has generally
been moderate.
As discussed in detail in our previous analysis, there are a variety of factors that may
influence variations in premium changes, including the accuracy with which
insurers had predicted their rates in 2014 and 2015, the composition of the risk
pool, the steadiness of enrollment growth, and competitive dynamics. The
proposed rates for 2016 represent the first year where insurers are able to set
premiums based on actual claims experience for Marketplace enrollees. Even so,
insurers only have annual data from 2014, which was incomplete (as most
enrollees did not effectuate coverage until mid-year, whereas deductibles are
annual) and not necessarily representative (as there was likely pent-up demand
for health services among people who were previously uninsured).
Some of this remaining uncertainty is mitigated by the ACAfs g3 Rfsh
programs. These programs – risk adjustment, reinsurance, and risk corridors –
redistribute risk among insurance carriers so that plans that enroll
disproportionately sicker or higher-cost enrollees can be prevented from having
to significantly raise premiums. However, two of these three programs
(reinsurance and risk corridors) were only intended to be transitional, and reinsurance funding is phasing out from a maximum of $10
billion in 2014 to $4 billion in 2016. Another potential driver of 2016 premium
increases is that the underlying cost of health care is expected to increase
next year, particularly for prescription drugs.
Factors that could have a downward effect on premiums in 2016 include
competitive forces (for which average growth in the number of insurers is a
positive sign); increases in enrollment among the uninsured (which would bring
healthier enrollees into the risk pool); and the movement of healthier enrollees
from ggrandmotheredh plans into ACA-compliant plans either on- or off- of the
exchange.
Finalized information on 2016 Marketplace premiums will become available for
these and other states over the next few months, with complete information for
all 50 states typically becoming public shortly before open enrollment, which
begins November 1, 2015.
Methods
Data were collected from health insurer rate filing submitted to state
regulators. These submissions are publicly available for the states we analyzed.
Most rate information is available in the form of a SERFF filing (System for
Electronic Rate and Form Filing) that includes a base rate and other factors
that build up to an individual rate. In states where filings were unavailable,
we gathered data from tables released by state insurance departments. Filings
are still preliminary. All premiums in this analysis are at the rating area
level, and some plans may not be available in all cities or counties within the
rating area. Rating areas are typically groups of neighboring counties, so a
major city in the area was chosen for identification purposes.