Health Insurance Premium Increases in the Individual Market Since the Passage of the Affordable Care Act

Publication Date

Feb 21, 2013

By:
Rose Chu and Richard Kronick

The Affordable Care Act brings an unprecedented level of scrutiny and transparency to health insurance rate increases. Evidence suggests that the Affordable Care Act contributed to a reduction in the rate of increase in premiums in the individual market since 2010. The proportion of rate filings in which the requested increase was 10 percent or more declined from 75 percent in 2010 to 34 percent in 2012, consistent with the increased scrutiny that such requests now receive. Available data for 2013 suggest that this pattern of slower premium growth has been maintained so far in 2013, with only 14 percent of requested rates at 10 percent or more. In addition, the average premium increase in 2012 was 30 percent below that in 2010.

Introduction

The Affordable Care Act brings an unprecedented level of scrutiny and transparency to health insurance rate increases. Thanks to the law, for the first time ever, insurance companies in all states cannot raise rates without accountability or transparency.equested an increase of 10 percent or more. It is plausible that insurers seeking to avoid scrutiny of their rate increase requests would have been more circumspect in proposing increases of 10 percent or more after implementation of the rate review requirement in September 2011 than prior to implementation. Second, we compare the rate of increase in 2011, 2012, and 2013 to increases in 2009 and 2010. If the Affordable Care Act is causing the rate of premium growth to decrease (or increase), then the rate of premium growth post-Affordable Care Act should be lower (or higher) than prior to implementation of the Affordable Care Act. However, decreases (or increases) in premium growth might be due to factors other than the Affordable Care Act. To control for general trends in health care costs, which have moderated substantially over the past few years, we compare the rate of increase in premiums in the individual market to the rate of increase in the market for employer sponsored insurance (ESI), using data from the MEPS-IC.

Results

Since 2010, there has been a decline in the proportion of rate filings in which the requested increase is at or above the Affordable Care Act threshold of 10 percent. In 2010, 75 percent of rate filings requested increases of 10 percent or more, a proportion that dropped to 34 percent in 2012 (See Figure 1).

Percentage of Individual Market Rate Filings with Rate Change Requests of 10 Percent or More
Source: Data from 9 states with 213 filings in 2009, 11 states with 238 filings in 2010, 15 states with 307 filings in 2011, 15 states with 283 filings in 2012, and 10 states with 77 filings in 2013. The 2013 results are incomplete for the 10 states that are included.

Although results for 2013 are still preliminary, the available data suggest that the slowdown in rate increases seen from 2010 to 2012 has continued into 2013. The proportion of policies with rate increases of 10 percent or more is much lower, 14 percent in 2013, than in any previous year (see Figure 1). Table A-1 Number of Policyholders and Rate Filings Included in the Analysis Policyholders State 2009 2010 2011 2012 2013

¹States without prior approval authority
Source: State insurance websites except directly from MN, NJ, and Washington State for 2009-2011 AR 61,594 52,894 46,654 38,357 41,162 CA¹ no data no data 879,031 1,056,924 166,485 CT no data no data 76,600 60,371 34,783 DE no data no data 7,935 1,481 no data FL 402,708 366,011 379,540 397,064 no data IN no data no data 162,967 130,214 172,275 ME 11,028 17,259 17,387 9,615 no data MN no data 150,097 147,679 154,543 102,244 NC 145,465 225,038 246,685 264,120 238,635 NJ¹ 74,624 78,973 83,871 72,668 no data OR 130,995 119,808 139,568 112,140 21,341 PA no data 118,288 125,175 183,664 93,411 RI 9,100 9,425 9,425 9,808 no data WA 178,711 184,371 176,863 172,477 71,403 WI¹ 105,843 124,541 88,683 51,486 5,020 Total 1,120,068 1,446,704 2,588,062 2,714,932 946,759

**Table A-1 Number of Policyholders and Rate Filings Included in the Analysis (cont.)**
Filings
State	2009	2010	2011	2012	2013
¹States without prior approval authority Source: State insurance websites except directly from MN, NJ, and Washington State for 2009-2011
AR	19	19	10	8	5
CA¹	no data	no data	23	25	4
CT	no data	no data	12	15	7
DE	no data	no data	6	5	no data
FL	68	52	58	48	no data
IN	no data	no data	42	23	10
ME	5	8	4	5	no data
MN	no data	11	9	15	5
NC	21	20	9	18	4
NJ¹	17	21	17	11	no data
OR	33	25	30	26	6
PA	no data	21	27	40	25
RI	1	1	1	1	no data
WA	14	14	13	9	3
WI¹	35	46	46	34	8
Total	213	238	307	283	77

**Table A-2 State Insurance Websites with Rate Change Information**
State	Rate Filings
AR	http://www.insurance.arkansas.gov/LH/FlgShpage/Filings.htm
CA	http://www.insurance.ca.gov/0250-insurers/HlthRateFilings/index.cfm http://wpso.dmhc.ca.gov/RateReview/
CT	www.catalog.state.ct.us/cid/portalApps/RateFilingDefault.aspx
DE	http://www.delawareinsurance.gov/departments/rates/MedWebRate2011_2012… http://delawareinsurance.gov/departments/rates/ratefilings.shtml
FL	http://www.floir.com/Office/DataReports.aspx http://www.floir.com/edms/
IN	http://www.in.gov/idoi/files/SerffReportIDOI113010_(4).pdf http://www.in.gov/idoi/ratewatch/
ME	http://www.maine.gov/pfr/insurance/PPACA/HFAI.htm#
MN	http://mn.gov/commerce/insurance/topics/medical/Access-Filing/access-fi…
NC	http://infoportal.ncdoi.net/filelookup.jsp?divtype=3
NJ	http://www.state.nj.us/dobi/lifehealthactuarial/rateinfo/ratefilings_ih…
OR	http://www.oregoninsurance.org/insurer/rates_forms/health_rate_filings/…
PA	http://www.portal.state.pa.us/portal/server.pt/community/industry_activ…
RI	http://www.ohic.ri.gov/Insurers_RegulatoryActions.php
WA	https://fortress.wa.gov/oic/onlinefilingsearch/
WI	https://ociaccess.oci.wi.gov/Companyfilings/jsp/rfsearch.oci