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


In September of 2012, the U.S. Department of Health & Human Services released their 2012 Annual Rate Review Report20 and cited major savings for consumers in both the individual and small group markets. Their report examined important aspects of the Rate Review Program, including 1) lowering rate increases and saving consumers’ money; 2) increasing transparency in the insurance market; and, 3) enhancing state rate review programs. By examining the data collected from states (and the District of Columbia) that participate in the Rate Review Grants program, DHHS was able to analyze requests for all rate increases, including those below the 10 percent threshold for public reporting. Their report concluded that in 2011 the estimated national average rate increase implemented in the individual market was 1.4 percent lower than the initial request from insurance companies, resulting in nearly $425 million in consumer savings. For the small group market, the estimated rate increases implemented were around 0.8 percent lower and resulted in consumer savings of over $600 million. It is important to note that DHHS’ analysis was not weighted by enrollment. To estimate premium savings for consumers, DHHS multiplied the average difference between requested and approved rates by the estimated average premium collected through MLR annual reports.

A subsequent research brief released by ASPE in February 2013, “Health Insurance Premium Increases in the Individual Market since the Passage of the Affordable Care Act,” provides a closer, enrollmentweighted look at activities in the individual insurance market during 2009-2013.21 The study evaluated rates of premium increases, as well as the prevalence of filings with increases of 10 percent or more – which would be subject to the September 2011 rate review requirement and public disclosure. Average rates of premium increase fell from 11.6 percent in 2010 to 8.1 percent in 2012, with a preliminary estimate for 2013 of 7.9 percent. Whereas the majority of filings submitted in 2009, 2010, and 2011 proposed increases 10 percent or more, only 34 percent did in 2012, and a preliminary estimate for 2013 of 14 percent of filings did so.

In October of 2012, The Kaiser Family Foundation (KFF) published a study entitled “Quantifying the Effects of Health Insurance Rate Review,”which also looked at individual and small group markets.22 This study consisted of reviewing rate filings submitted in 2011 and reviewed by either the state or federal government before May 1, 2012. The study looked at filings for major medical insurance projects affecting 100 or more policyholders. The filings were found online through public websites run either by the federal government (DHHS) or the individual state. Subsequently, the KFF study contains filings from 22 states and the District of Columbia for all rate changes, as well as filings that had requested increases above 10 percent from 11 states that have effective state reviews and 13 states subject to DHHS review.23

The KFF report’s analysis of publicly available data from states with effective rate review programs concludes that, “[Evidence] suggests that these programs have a material influence on the premiums that ultimately get charged to individuals and small businesses.”24 According to their study, rates that went into effect were about 20 percent lower than the rates originally requested. By analyzing 2011 data, the KFF report was also able to observe the period before and after the implementation of the ACA’s rate review requirements. While on average the requested rate change remained fairly constant through 2011, there was an observed spike in requests in August 2011 before the September implementation date. There was also an observed drop in the number of requests above the 10 percent threshold once the new ACA requirements went into effect. In addition, the study concluded that, of the filings analyzed, about one in five requests to change premiums were denied, lowered, or withdrawn during state review. In an analysis of filings from the 13 states using federal review, KFF reported that plans having a rate increase greater than 10 percent requested average rate increases of 16 percent. Of 48 filings analyzed, 37 were determined unreasonable, 9 were “not unreasonable,” and 2 were withdrawn by the insurer prior to review.

The House Committee on Energy and Commerce recently released an analysis of five states disclosing information about plans likely to be offered on Affordable Care Act health insurance marketplaces when they open in 2014.25 In order to evaluate the costs paid by a given enrollee from year to year, the study looks at the “rates for those who stay in comparable plans offered by their current insurer,” in addition to the carrier’s proposed or approved average premium rate change. Some detail about states’ respective regulation of the individual insurance market and participating carriers is also included. The report concludes that early results from the five states that have released public data on the 2014 individual market suggest an improvement compared to the decade prior to passage of the Affordable Care Act, and that consumers in many states will have improved access to insurance plans comparable to their current benefits but less expensive.

In addition to these studies, NORC’s study from November of last year, “Trends in Premiums in the Small Group and Individual Insurance Markets, 2008-2011,” is also relevant – estimates from that study are based on a slightly different sample and drew on slightly different data collection methods from the current study, but are roughly comparable. The Trends study estimated the lowest premium increases in both the individual and small group markets during these four years in 2011, the first year in which carriers were subject to the MLR requirements of the ACA.

20 Department of Health and Human Services, “2012 Annual Rate Review Report: Rate Review Saves Estimated $1 Billion for Consumers,” http://www.healthcare.gov/news/reports/rate-review09112012a.html. Published September 11, 2012, accessed April 8, 2013.

21 Department of Health and Human Services, “Health Insurance Premium Increases in the Individual Market since the Passage of the Affordable Care Act,” http://aspe.hhs.gov/health/reports/2013/rateincreaseindvmkt/rb.pdf. Published February 22, 2013, accessed May 29, 2013.

22 Kaiser Family Foundation, “Quantifying the Effects of Health Insurance Rate Review,” October 2012. http://www.kff.org/healthreform/upload/8376.pdf. Accessed April 8, 2013.

23 Ibid. pp 5, 9, 11.

24 Ibid. pg 13.

25 House of Representatives Committee on Energy and Commerce Democratic Staff, “Analysis of Recent Filings of Proposed Affordable Care Act Insurance Rates in Five States,” http://democrats.energycommerce.house.gov/system/files/documents/.... Published May 20, 2013, accessed May 29, 2013.

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