Carriers with more experience in the conventional major medical market may have shifted to higher premiums more quickly than other carriers selling through the new public health insurance exchange system.
Linda Blumberg and other analysts at the Urban Institute looked at carriers’ Patient Protection and Affordable Care Act (PPACA) individual exchange plan pricing strategies in a report backed by the Robert Wood Johnson Foundation.
The analysts looked at premium and insurer data for a sample of rating regions in 30 states. They divided the insurers into six categories — national insurers, regional insurers, Blue Cross and Blue Shield insurers, insurers that previously had focused on the Medicaid market, and the new nonprofit, member-owned CO-OPs created by PPACA.
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The analysts then looked to see how likely the insurers in each category were to be offering the lowest-priced or second-lowest-priced silver plan in each rating region in 2014 and 2015, and whether the insurer’s pricing position changed in 2015.
The analysts found that national insurers, regional insurers and the Blues were much more conservative about pricing this year: 115 had pricing positions that were “worse” (meaning that their prices were toward the higher end of the range) this year, and only 15 had pricing positions that were “better.”
Insurers sponsored by hospitals and other health care provider organizations were equally likely have a better pricing positions and worse pricing positions: 16 had prices that moved toward the higher end of the range, and 16 had prices that moved toward the lower end of the range.
Medicaid carriers and CO-OPs seemed to be pricing more aggressively: 44 had better pricing positions, meaning that their prices moved toward the lower end of the range this year, and 11 had pricing positions that moved toward the higher end of the range.
Insurers had only a few months of claims data for plans sold under the PPACA rules that took effect in 2014 when they priced 2015 coverage. This year, insurers that are filing rates for 2016 coverage have a full year of 2014 experience data available, and some insurers in states that post complete or nearly rate filings, such as New York state, are saying 2014 claims exceeded premium revenue by a substantial margin.
Oregon Insurance Commissioner Laura Cali has ordered five insurers to charge more in 2016 than they had originally proposed because of concerns about solvency.
Health Republic Insurance Company of New York, a CO-OP, says its 2014 claim total was about 33 percent higher than total premium revenue, giving it a medical loss ratio of about 133 percent.
The Urban Institute analysts note that insurers face incentives to price aggressively in 2016 as well as pressure to price conservatively.
“We do know that marketplaces are by and large the only growth market for insurers,” the analysts say. “Any insurer that chooses to be cautious and set high rates may well avoid losses, but is also likely to have a small market share.”