2015 Health Insurance Rates Released

A recent headline reads, “Average health insurance rates lower in 2015.” In aggregate this is great news for all Oregonians that utilize the health insurance exchange, CoverOregon.  One year is not a trend but after years of double digit increases Oregon businesses would welcome rates stabilizing like workers’ compensation did in the 1990s. Oregon is still benefiting from those changes.

A closer examination of the approved rates shows some insurers with increases but others with double digit decreases.  This is counter to what I had expected.  The coverage from the health insurance exchange began in 2014.  The following logic was put forth that insurers would have to submit rate changes in the first half of 2014, thus they would not have actuary data to base rate changes.  Unless insurers were able to approximate changes based on the available data another explanation may be a push to gain market share or decrease exposure (decrease market share).  Moda is an interesting example.  They had some of the lowest prices in 2014 but in 2015 there will be significant increases in premium.  Another large carrier, Providence, had similar large decreases.  Overall pricing seems to be converging into a narrower band.

An interesting point to note is the pricing between small group and individual plans.  The press release reads, “…the average monthly premium for an individual standard plan [silver plan] for a 40-year-old in Portland in 2015 is estimated at $250, compared to $262 in 2014. For a similar small employer plan, the average 2015 premium is an estimated $308 per month, compared with $327 in 2014.”  That is just under $60 difference for what appears to be the same plan.  One would assume that adverse selection would take place in the individual market driving up prices.  However individual market has a temporary advantage because it enjoys a special reinsurance program.  Carriers are new to the individual exchange market and when faced with unknowns they generally raise prices. Reinsurance allows carriers some peace of mind until they build new actuary models based on actual experience.  This reinsurance program winds down at the end of 2016.
Arin J. Carmack