Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law

Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching. 

One big factor affecting whether consumers stick with their current plans or switch to a lower-priced option is how the Obama administration designs the re-enrollment process for people who bought coverage in 2014. Insurers are waiting to see if the federal government will make it easy for most consumers to renew their coverage without going through many of the steps they did in the first year, which could make it more likely they would also stick with their existing insurance plans.

  • Even though insurance carriers offering plans in California have not announced their rates for 2015, a picture is emerging from proposed 2015 insurance rates in the 10 states that have completed their filings. These 10 states that stretch from Rhode Island to Washington state, in all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year, according to a Wall Street Journal review of the filings.  

With a dominant market share, analysts say, carriers feel they have room to raise rates. Nine of the carriers are proposing average increases for 2015 that range from 8.5% by Anthem Inc. in Virginia to 22.8% from CareFirst for its BlueChoice plans in Maryland. Most of these large carriers’ proposed rate increases hover around 10%. Maine’s carrier is keeping rates flat.

  • At the same time, insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets. 

At least two Oregon plans are looking to lower their rates for next year. Oregon’s Health CO-OP, a nonprofit start-up that enrolled fewer than 1,000 people in the first main enrollment period in 2014, is seeking to slash rates by 21%.

The co-op’s chief executive, Ralph Prows, said it was counting on the lower rates to lift enrollment, and noted health costs from the newly insured might be more modest than initially expected. “We have proposed a significant decrease, and it will leave us in a much better market position on price,” he said.

Meanwhile, in Connecticut, Indiana, Maryland, Michigan, Oregon, Rhode Island and Washington, insurers that had low enrollments in 2014 or are newly joining the market for 2015 are now bidding to become the least-expensive option for consumers who want to buy silver plans for 2015.

Complicating next year’s pricing is the fact that insurers have scant data on their enrollees’ use of health services, because many consumers waited until the March deadline to buy plans.

 “Carriers are as much in the dark as they were last year, but what they do know is where the rest of the market is,” said Robert Laszewski, president of Health Policy & Strategy Associates LLC, a health-insurance consultant in Alexandria, Va.

The proposed increases by large carriers partly reflect medical inflation, which is currently projected at around 5.4% for insured people this year, said Richard Evans, an analyst at SSR Health LLC, an investment-research firm in Montclair, N.J. Those increases will outpace gains in household income, making it probable that consumers will feel them, he said.

It is difficult to determine precisely what impact the Affordable Care Act has had on insurance premiums. Insurance companies say fees and coverage mandates in the law have forced them to raise their rates.

America’s Health Insurance Plans, the main insurer lobbying group, says that sharply rising prescription-drug costs are a main force pushing premiums upward. “We have some very high $100,000 cancer drugs coming on at the end of the year,” said Karen Ignagni, the association’s president and CEO.

*Modified from a wsj.com article

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