“The Blues and WellPoint approached the exchange market aggressively in 2014, participating in nearly all states where they currently have a presence in the individual market,” said Dan Mendelson, CEO of Avalere Health. “However, new entrants and pricing strategies in this consumer-driven market threaten to shake things up in 2015, particularly for new enrollees.”
Specifically, WellPoint leads enrollment in California, Colorado, Connecticut, Indiana, and Virginia, and Blues plans have captured the greatest portion of lives in the District of Columbia, Florida, Maryland, Michigan, Rhode Island, Vermont, and Washington. Interestingly, CO-OPs have attracted a sizeable share of covered lives in Maine and New York.
According to proposed and final rates in the 15 states analyzed, nine of the issuers that captured the most enrollment requested rate increases of nine percent or more for the 2015 plan year. Rates are final in Florida, Maryland, New York, Oregon, Rhode Island, and Washington. Proposed rates in the other states could be reduced before they are finalized.
“Because proposed 2015 rates were filed when exchange plans had little experience with their new members, rates may reflect that early enrollees may have been older or had higher health needs. It’s important to pay attention to the premium increases among the highest-enrollment plans in 2014 because current enrollees who renew their coverage will be directly impacted,” said Caroline Pearson, vice president at Avalere. “Consumers should look at their plan premiums carefully and consider whether they should shop for a lower premium option in 2015 rather than re-enroll, especially if they qualify for federal premium subsidies.”
The premium increases proposed by the dominant exchange carriers are consistent with historical growth. Indeed, according to the Commonwealth Fund (Johnathan Gruber, 2014), premiums in the individual market grew 10 percent or more per year prior to the launch of health insurance exchanges. In 2010, the average rate increase was nearly 12 percent, ranging from 3 percent in Idaho to almost 22 percent in Nebraska.
Analysis includes 2014 premiums and proposed 2015 premiums in CA, CO, CT, DC, IN, ME, MI, VT, and VA, and final rates in FL, MD, NY OR, RI, and WA. All premiums are for a 40-year old non-smoker. Information was collected via rate filings that were publicly available as of September 5, 2014. Rate filings also contained market share data (number of lives covered). Rate filings are proposed in many states; therefore, final rates may change.
For more information about exchanges, contact Caroline Pearson at CPearson@Avalere.com.