Maybe some public exchange plan issuer is cutting rates 50 percent in 2015, and throwing in a free nose piercing. Maybe some other exchange plan issuer is raising rates 50 percent, and trying to improve its risk profile by cutting out all of the endocrinologists with offices that smell good.
So, what are the issuers that consumers and producers actually care about doing?
We tried to answer that question by looking at the 2015 individual health rate moves announced by major exchange plan issuers and other major individual health policy issuers. When possible, we used exchange data to identify the exchange market leaders. When that was not feasible, we used Henry J. Kaiser Family Foundation data to identify the gorillas.
The outcome: The gorillas are preparing to raise individual exchange qualified health plan (QHP) rates substantially in 2015, and they are more than twice as likely to be pulling rates in their state up than to be pushing rates down.
We found preliminary 2015 individual exchange QHP rates for gorilla issuers in 19 states. The changes proposed range from a 3.06 percent decrease in Kentucky, for WellPoint’s Anthem unit, to a 30.2 percent increase in Maryland, for CareFirst.
But the idea that a significant number of the gorillas are cutting 2015 rates is wrong: 17 of the states are proposing rate increases, not cuts. The median proposed increase is in Indiana. There, Anthem has proposed a 9.65 percent increase.
We have a table giving the gorillas’ preliminary rate change proposals, along with links to sources of individual QHP rate information, at the end of this article.
See also: Actuaries prep for rate filing season.
Where is that gorilla going?
Another way to think about the gorillas’ rates is to look at whether those issuers seem to be pushing exchange QHP rates down, by proposing 2015 changes at or near the low end for an exchange, or pulling rates up, by proposing changes at or near the high end. Gorillas in four states – Kentucky, Maine, Mississippi and Iowa – seem to be pulling rates down. Gorillas in nine states seem to be pushing rates up.
Why is 800-pound gorilla 2015 rate information so hard to find?
One challenge is that the U.S. Department of Health and Human Services (HHS) and the states themselves have failed to come up with a standardized approach for presenting preliminary 2015 rate information. Developers of the Patient Protection and Affordable Care Act (PPACA) hoped the PPACA exchange system would provide the kind of transparent market for health insurance that a stock exchange provides for stock.
In the real world, some states that purport to be enthusiastic supporters of the exchange system, such as Minnesota, have provided no 2015 preliminary rate information. Some states that present themselves as opposing the exchange system, such as Michigan, have posted clear, easy-to-find charts neatly summarizing their states’ proposed 2015 rate changes.
See also: ‘Special’ health sales a mystery.
Why are the gorilla plans’ rates going up?
Some states give consumers access to complete rate filings. QHP issuers seem to be assuming that increases in the cost of medical care will be low both this year and next year, and that enrollee use of care will be just a little higher in 2015 than in 2014. A bigger factor may be scheduled shrinkage of the PPACA reinsurance program. The temporary program is supposed to help PPACA-compliant individual plans cover the claims of patients with big bills.
This year, the PPACA reinsurance program is supposed to pay 80 percent of eligible bills from an attachment point of $45,000 up to a maximum of $250,000. Next year, the attachment point is supposed to increase to $70,000, and the percentage covered is set to fall to 50 percent. Actuaries are predicting the reinsurance program shrinkage will reduce incoming cash flow by an amount equal to about 2 percent to 5 percent of premium revenue.
Here’s the chart we created using state 2015 rate announcements, state insurance departments’ rate filing search tools, and, in one case, a health insurer’s press release.
We got the high-end and low-end rate change numbers we used for the last column — “Where the gorilla is moving prices in its market” — from a database created by analysts at PricewaterhouseCoopers.
We classified a state as moving prices in its market up if its proposed rate change was within about 2 percentage points of the highest increase proposed in its market, and we classified a state moving prices in its market down if its proposed rate change was within about 2 percentage points of the biggest cut or smallest increase proposed.
We classifed the other states as being in the middle of the rate mix in their markets.
|2015||Proposed 2015 rate change||Where the gorilla is moving prices in its market|
|Louisiana||Louisiana Health Service & Indemnity Company||19.30%||Up|
|Florida||Blue Cross & Blue Shield of Florida||18.00%||Up|
|New York||Empire HMO (WellPoint)||18.00%||Up|
|District of Columbia||CareFirst||13.40%||Up|
|Rhode Island||Blue Cross & Blue Shield of Rhode Island||12.30%||Up|
|California||Anthem (WellPoint) (Group)||9.80%||Up|
|Michigan||Blue Cross Blue Shield of Michigan||9.70%||Middle|
|Nevada||Health Plan of Nevada||8.90%||Middle|
|Washington||Premera Blue Cross||8.10%||Middle|
|Oregon||Regence Blue Cross Blue Shield||3.20%||Middle|
|Maine||Maine Community Health Options||0.00%||Down|
See also: Medical cost trend may creep up in 2015.