Charles Gaba is a healthinsurance.org contributor and founder of ACAsignups.net site designed to track the Affordable Care Act enrollments since 2014. According to Gaba’s blog titled, Presenting the ACA Signups 2017 Requested Rate Hike Challenge!!, requested rates from each state average just over the 20 percent mark. Previous annual reports tracked the difference between the requested rate and the actual rate imposed.
Premium Rate Requests and Approval
2016 projections started at 12 to 13 percent nationally and were estimated to reduce to 9 percent. Once the requests were processed and adjusted, they ended up being 11.6 percent nationally, while the approved average ended up at 8 percent.
The data received by mid-June for 35 states as well as DC, currently represents 79 percent of the population with a 21.67 percent increase requested. Approval numbers are expected to be less, nationally, due to the numerous filings of each state. Requests have to be justified by regulators and the data history has shown that it often leads to rather large decreases from the original request to the actually approved numbers.
As the last few states are added to the data, national numbers are not expected to change very much and the estimate will still hover around the 22 percent range. The current estimate on approval of the requested changes is closer to 18 percent nationally, and effective rates based on full policy premium price should reduce to 14 percent by next spring. Data continues to be pulled and adjusted throughout the year.
These projections do not take into account the co-pays, deductibles, or provider network structure. It is based on 100 percent of enrollees auto-renewing their current plans, then weighted based on qualifying health plans and population in each individual state.
Example of Changes from Requested to approved Rates:
Anthem Blue Cross and Blue Shield health plans serve 55,000 people on Connecticut’s individual market. It is approved to rise by an average of 2.4 percent next year. The insurance company, ConnectiCare has 34,400 customers with an average rate increase of 8.5 percent. They both requested higher rate increases, but the Connecticut Insurance Department regulators felt they were unwarranted and forced revisions to initial proposals.
Another company, Golden Rule, covering 3,414 people, requested an 18.5 percent hike that was knocked down to only 1.1 percent.
Overall, whether products were purchased on or off the marketplace, the average was only a 3.5 percent increase on the individual market. The small group market did even better at a 2.9 percent reduction.
Final Rates Versus Subsidized Rates
Keep in mind that the approved final rates are dramatically different between the full price for those above 400% of the Federal Poverty Line (FPL) and subsidized rates.
Example of Tax Credits Impact:
Most Florida residents still get coverage from employer plans or government programs such as Medicare, but roughly 1. 7 million purchased from the Obamacare marketplace plans in 2016.
About 91 percent qualified for tax credits. The average monthly full-price premium was $386. After the credits were applied it was reduced to $84 with only a 2 percent increase from the prior year.
Benchmark Basis
Benchmark pricing for the marketplace plans refers to the base rate of the metal categories (bronze, silver, gold) used to determine the ACA’s Advance Premium Tax Credit (APTC). The variation of these rates is actually more important than the change in other premium rates because these determine the amount of the federal tax credit being given.
If the benchmark policy rate in your area changes, it will change your tax credit formula and amount of credit received even if your income level, household dependents, policy type, and premium are the same. The Kaiser Family Foundation website shows how this worked from 2015 to 2016. Inquire about changes to base plan rates and compare pricing before auto-renewing annually.
It is clear, estimates based on requests by each state are far from the approved numbers and in many cases, much less. The final stated premiums are based on the full price before the tax cuts or subsidies are applied, and new benchmark base plan pricing encourages shopping for the best price each year regardless.