7 states where PPACA forces cut individual health actuarial value

Some insurers have complained about seeing high medical claims in 2015, but, on paper, at least, the people who had individual major medical coverage written under the new laws in 2015 looked healthier than the people who had new-law individual major medical coverage in 2014.

Early, incomplete government figures show that the new-law plans’ average health risk score fell 6.3 percent from the year before, to about 1.5 in 2015.

The plans covered an average of 69.8 percent of the actuarial value of the standard Patient Protection and Affordable Care Act (PPACA) essential health benefits package, down from 70.8 percent in 2014.

The enrollees’ average monthly premium increased 4 percent, to $380.

The Center for Consumer Information & Insurance Oversight (CCIIO) has published the data used to calculate those averages in a new batch of interim 2015 market summary figures. 

CCIIO is the arm of the Centers for Medicare & Medicaid Services (CMS) that runs the PPACA programs that affect the ordinary commercial health insurance market. CCIIO published the preliminary 2015 market summary figures to help health insurers estimate how much cash they might get from — or how much cash they might have to pay into — the PPACA risk-adjustment program.

The PPACA risk-adjustment program is supposed to use cash from issuers of PPACA-compliant individual and small-group plans with low-risk enrollees to compensate issuers of PPACA-compliant plans with high-risk enrollees, to protect market players against antiselection.

CCIIO says it had enough clean data to publish early 2015 market summary figures for 21 states and the District of Columbia. The agency left many other states, including California and Texas, out of the interim 2015 report.

See also: CMS sees possible insurer PPACA data integrity problems

CCIIO published a similar report, which includes 2014 plan year data for all states except for Massachusetts, in September. CCIIO left Massachusetts out because Massachusetts runs its own risk-adjustment program.

The 2015 and 2014 reports include only information about fully PPACA-compliant individual, small-group and catastrophic coverage. The reports do not include information about the “grandfathered” or “grandmothered” policies written under the laws in effect before Jan. 1, 2014.

For the individual market in each state included in the report, CCIIO gives the average monthly premium, the average plan health risk score, the average enrollee age adjustment factor, and the average actuarial value of the benefits included in the plan.

A plan is supposed to get its overall risk score by using enrollee diagnosis information to assign a score to each enrollee. Critics of the system have suggested that some plans, and especially small, new plans with many new enrollees, may have had a hard time getting and analyzing the patient information they need to assign accurate risk scores.

See also: How sick is everyone? A vast PPACA tracking system takes shape

The actuarial value percentage shows how much of the value of the standard PPACA essential health benefits (EHB) package the plan covers. A bronze plan, for example, is supposed to cover about 60 percent of the actuarial value of the EHB package, and a silver plan is supposed to cover 70 percent of the value of the EHB package.

An issuer can also sell a special low-value type of plan, a catastrophic plan, to applicants under 30 and other applicants who qualify for a hardship exemption from the requirement to have what regulators classify as PPACA-compliant minimum essential coverage.

CCIIO itself gives only state-by-state numbers for each state, with no aggregate numbers or averages. The overall averages in the next pages come from LifeHealthPro.com calculations made using the interim 2015 data, along with the 2014 numbers for the jurisdictions included in the 2015 report.

One way an agent or broker can use the data in the 2014 and 2015 reports is to put it in a spreadsheet and see how average premiums have changed. Another way is to see how the average actuarial value of the coverage has changed.

The average actuarial value of consumers’ individual coverage fell in all but three of the jurisdictions included in the interim 2015 report.

For a look at the seven states in which the average actuarial value fell the most, read on.

7. Iowa

2014 actuarial value: 70.4%

2015 actuarial value: 68.9%

Change, in %: -2.1%