Insurers in many states are seeking single-digit premium rate increases for health plans sold on the Affordable Care Act's (ACA) exchanges—and some are even seeking premium decreases, marking a significant change from several years of double-digit rate increases.
Insurers that participate in the exchanges are in the process of submitting premium rates to state regulators for the 2019 coverage year. The ACA's open enrollment period for the 2019 coverage year is set to begin Nov. 15, with rates taking effect Jan. 1. According to the Wall Street Journal, insurers will finalize their 2019 premium rates in October.
Premium price cuts, single digit increases
According to The Hill, proposed premium rate increases in at least eight states have averaged below 10%, while five states have reported double-digit increases.
For example, California reported that insurers are seeking an average 9% premium rate increase across the state, while Pennsylvania recently said insurers on average proposed a less than 1% premium rate increase in the state. According to the Journal, some insurers in Mississippi and Florida also have proposed single-digit increases.
Meanwhile, insurers in some states—including Arizona, Illinois, Minnesota, North Carolina, and Texas—have proposed premium rate cuts. For example, insurers in Louisiana proposed an average 6.9% cut to premium rates for 2019, Blue Cross and Blue Shield of North Carolina said it proposed rates that could lower premiums by an average 4.1%, and Blue Cross Blue Shield of Wyoming is looking to roll back premium rates for 2019 by an average 0.27%. According to the Journal, Blue Cross Blue Shield of Wyoming's proposed rate reduction follows a 48% rate hike for the 2018 coverage year.
But some states will continue to see double-digit premium rate increases, the Journal reports. Insurers in Connecticut proposed a 12.3% average premium rate increase. While the increase is double-digit, state officials noted that the average proposed premium rate for 2019 is lower than 2018's average rate hike of 25.5%.
Consumers still could face hefty premium rates
Despite the lower-than-expected premium rate increases, Axios' "Vitals" reports that consumers are likely to continue to face high premiums after years of previous double-digit increases—and those who do not qualify for federal subsidies could be on the hook for the full amount.
For example, Kaiser Family Foundation data show that, if proposed rates are finalized, a 40-year-old nonsmoker living in Denver who is not eligible for a federal subsidy to offset the cost of coverage would see premiums rise by an average of 6% next year for a benchmark plan., and the individual would pay about $439 a month for the plan.
According to the Journal, the restrained premium rate proposals suggest the exchange market is stabilizing. KFF data suggest insurers last year achieved their best financial results on exchange plans since those plans launched in 2014, and that progress appears to have continued in the first quarter of 2018.
In some states, the lower 2019 rate increases also reflect changes made by the state to improve the exchange market. For example, some insurers in Maine proposed lower premium rate increases for 2019 because state officials received federal permission to implement a reinsurance program.
However, some analysts said more insurers would have proposed premium rate decreases if it were not for policy changes that affect the individual health insurance market, such as those to expand options for alternative types of coverage. In addition, the Journal reports some insurers proposed extra rate increases for 2019 to account for the ACA's individual mandate penalty going away next year.
CareSource, a nonprofit insurer that offers exchange plans in four states, said it included about a 5% extra margin in its proposed premium rate filings to account for the changes.
According to The Hill, some insurers already had accounted for those change in their 2018 premium rate requests.
Mark Nave—a senior vice president at Highmark, an insurer that is part of Highmark Health—said the exchanges "are stabilizing in spite of some of the challenges." He added, "The vast majority of our members will be seeing much lower rate increases this year."
Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation, said, "The fact that insurers are doing so well financially right now means they don't need significant premiums increases in spite of the fact that repeal of the individual mandate penalty and expansion of short term plans will drive up their costs." He added, "The strong insurer profits are pushing premiums down while individual mandate and expansion of short term plans are pushing premiums up" (Wilde Mathews/Walker, Wall Street Journal, 8/1; Baker, "Vitals," Axios, 8/2; Hellman, The Hill, 7/26; Morse, Healthcare Finance News, 7/23; Dalesio, Sacramento Bee, 7/31; AP/Sacramento Bee, 8/1).
Cheat sheet: What you need to know about the ACA
The Patient Protection and Affordable Care Act, otherwise known as the ACA, is the comprehensive health care reform bill passed by Congress in March, 2010. The law reshapes the way health care is delivered and financed by transitioning providers from a volume-based fee-for-service system toward value-based care.
Download the ACA cheat sheet to get a quick overview of this significant U.S. health care legislation.