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By Sara Hansard
May 24 — Average premium requests for 2017 for the most popular type of ACA marketplace plans are 16 percent higher in the first nine states to make them public, according to an Avalere Health analysis released May 24.
The 16 percent average increase is for all silver-tier plans, which cover an average of about 70 percent of medical claims. The Avalere analysis was based on premiums for a 50-year-old male nonsmoker.
However, the average increase requested for the lowest-cost silver-tier plans was only 7 percent, and it was 8 percent for the second lowest-cost silver plans, Avalere Senior Vice President Caroline Pearson told Bloomberg BNA May 24.
“Rates are certainly going up more in 2017 than they did in 2016,” but the fact that premium increases are lower for the lowest-cost silver plans “tells you that insurers are still competing aggressively to win enrollment by being the lowest-cost insurer,” she said.
While the nine states that have made rate filings public so far are just an early indication of premium requests, the 2017 rates are being closely watched with the presidential election looming in November when open enrollment takes place. Losses are expected to top $8 billion for the 70 percent of plans that were unprofitable in 2014 and 2015, the first two years the marketplaces were open, and insurers are expected to ask for bigger premiums requests this year to try to become profitable.
“We're expecting that the final rates will come down somewhat, because that generally happens” after insurance regulators review them and grant approvals, Pearson said. In addition, she added, “Most consumers are protected from increases by premium subsidies which cap how much they spend per month.”
Under the ACA, marketplace enrollees with household incomes between 100 percent and 400 percent of the federal poverty level are eligible for premium tax credits to help them pay for coverage, and the subsidies are based on the cost of the second lowest-cost silver tier plan in each marketplace. Of the approximately 8.8 million consumers who were enrolled in ACA marketplace plans at the end of December 2015 about 84 percent, or some 7.4 million consumers, were receiving an advance payment of the premium tax credit averaging $272 per month, the Centers for Medicare & Medicaid Services reported March 11.
The average premium requested for 2017 for a 50-year-old male nonsmoker among all silver plans in the nine states Avalere studied was $521 per month; the average for the lowest-cost silver plan was $411 per month; and the average for the second-lowest-cost silver plan was $431 per month.
The nine jurisdictions that have so far reported all premium requests are the District of Columbia, Indiana, Maryland, Maine, New York, Oregon, Vermont, Virginia and Washington.
The premium requests, for a 50-year-old male nonsmoker, varied widely among the states, from an average 42 percent increase to $540 per month in Oregon to an average 25 percent decrease to $302 per month in New York for the second lowest-cost silver plan, according to the Avalere report.
Avalere also projected that just over 10 million people will have ACA exchange coverage by the end of 2016, well below initial Congressional Budget Office predictions that 21 million people would be enrolled then. As a result the risk pool is smaller and sicker than many carriers initially assumed, and “premium increases may be necessary to account for the population enrolled and make the market sustainable over time,” it said.
Another report released May 24, written by Urban Institute researchers, found that premiums increased an average of 8 percent from 2015 to 2016 for the lowest-cost silver plans in all 50 states and the District of Columbia. The report found that “the more competitors there are in a market the lower premiums are,” lead author John Holahan told Bloomberg BNA May 24.
Premium changes varied widely—from an average 42 percent increase in Oklahoma to a 12 percent decrease in Indiana, Holahan said. Twenty-six percent of people live in regions where premiums for the lowest-cost silver plan increased more than 15 percent, the report said.
Plans that had lower premium in 2015 than the national average had higher increases in 2016, and plans with higher premiums had lower increases, Holahan said.
In markets with Medicaid managed care plans, such as those offered by Centene Corp. and Molina Healthcare Inc., “both premiums and premium increases were a lot lower,” Holahan said.
In addition, “Provider-sponsored plans were often very competitive and contributed to keeping premiums low,” he said.
Large national carriers, such as Aetna Inc. and UnitedHealth Group Inc., were “sometimes competitive,” Holahan said, but in general they had higher premiums.
United is exiting most ACA markets in 2017 after it announced in January that it expected to lose about $1 billion from its exchange plans in 2015 and 2016.
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The Urban Institute report is at https://www.rwjf.org/en/library/research/2016/05/increases-in-2016-marketplace-nongroup-premiums.html.
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