Effects of Implementing State Insurance Market Reform, 2011-2012. Findings

06/07/2013

Premium increases have slowed since 2011, the same year ACA rate regulations went into effect. In the individual market, the average premium increase effected declined from 11.7 percent in 2010 as estimated based on the sample of states included in the Trends study to 7.0 percent in 2011 and 7.1 percent in 2012 as estimated using the sample of states in the current study. In the small group market, premium increases declined significantly from 8.8 percent in 2010 to 6.1 percent in 2011 to 4.8 percent in 2012.

The slowing of premium increases has two dimensions. First, insurers requested smaller premium rate increases in both individual and small group markets. Second, regulators reduced insurers’ requested rates of premium increase more extensively after the ACA rate review provisions went into effect. In 2011 and 2012, state regulators modified about 24 percent of rate requests in the individual market and 15 percent in the small group market, but the average reduction in requested premiums was 11 and 7 percent respectively in 2011 and 13 and 24 percent respectively in 2012.

Data from this study suggest that many carriers submitted filings in the months and weeks prior to the start of rate review required under the ACA on September 1, 2011. In August of 2011 NORC found 86 filings in the individual/conversion market, of which the majority were for increases of 10 percent or more. In contrast, insurers submitted 16 filings in September, and none of which were for 10 percent or more. In the small group market, where plan years tend to be calendar years, insurers submitted 56 filings in August and 18 in September.

After “reasonableness review” was implemented on September 1, premium increases slowed. In the individual/conversion market, average premiums rose by 7.0 percent in filings submitted both before September 1st and after, although the rates initially proposed by carriers fell from 8.1 percent to 7.5 percent. In the small group market, premium increases averaged 4.3 percent before and 3.1 percent after the provision was implemented. In the individual/conversion market fewer filings proposed increases of 10 percent or more (43 percent before to 20 percent after implementation). In the small group market, this percentage declined from 21 percent to 10 percent.

Premium increases varied considerably among individual states. Of the 16 states with reportable data in both study years in the individual market, four (Oklahoma, Oregon, Virginia, and Washington) had a statistically significant decline in the average premium rate increase from 2011 to 2012. Of the 16 states with reportable data in both study years in the small group market, eight (California, Florida, Maine, Michigan, North Carolina, New York, Oregon, and Washington) had a statistically significant decline in the average rate of premium increase from 2011 to 2012.

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