Effects of Implementing State Insurance Market Reform, 2011-2012. Relationship of Carrier Size, Product Type, and Market Concentration on Approval Rates

06/07/2013

As shown in Table 25 below, in the individual market, we found that larger carriers had significantly higher approval rates than smaller carriers in 2011, with larger carriers obtaining approval for 78.8 percent of premium increases compared to only 69.2 percent approved for smaller carriers. However, larger carriers had lower approval rates (83.2 percent of premium increases approved) than smaller carriers in 2012 (87.2 percent of premium increases approved), although this difference is not significant.

Table 25: Percentage of Premium Increases Approved, by Year, by Carrier Size - Individual/Conversion

Carrier Size Trends 2008 Trends 2009 Trends 2010 Trends 2011† SMR 2011 SMR 2012
Top 3 Carrier 100.0% 92.1% 84.7% 87.2% 78.8% 83.2%
Other Carrier 39.8%* 54.0%* 76.1%* 37.7%* 69.2%* 87.2%

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from Top 3 Carrier at p < .05.
Note: Percentage is calculated as the percentage of filings with an “approved” status among the filings for which the regulatory disposition was known. Filings from “file and use” states are not included in the analysis.

In the small group market, shown below in Table 26, smaller carriers had significantly higher approval rates in 2011, with smaller carriers approving 92.3 percent of premium increases, compared to 74.4 percent approved for larger carriers. However, while larger carriers also had a lower approval rate in 2012 (74.2 percent vs. 79.2 percent for smaller carriers), the difference between the two was not statistically significant.

Table 26: Percentage of Premium Increases Approved, by Year, by Carrier Size - Small Group

Carrier Size Trends 2008 Trends 2009 Trends 2010 Trends 2011† SMR 2011 SMR 2012
Top 3 Carrier 94.5% 88.7% 74.3% 64.1% 74.4% 74.2%
Other Carrier 70.4%* 33.2%* 55.3%* 80.4%* 92.3%* 79.2%

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from Top 3 Carrier at p < .05.
Note: Percentage is calculated as the percentage of filings with an “approved” status among the filings for which the regulatory disposition was known. Filings from “file and use” states are not included in the analysis.

We also analyzed the observed differences in approval rates by product type. In the individual market, shown in Table 27, we found that Indemnity plans had significantly higher approval rates than PPO plans in 2011. However, in 2012, both HMO and Indemnity plans differed significantly from PPO plans in approval rates. HMO plans were significantly lower, approving 72.2 percent, compared to 85.6 percent approved for PPO. Indemnity plans also had a significantly lower approval rate, 72.9 percent, compared to 85.6 percent approved for PPO.

Table 27: Percentage of Premium Increases Approved, by Year, by Product Type - Individual/Conversion

Product Type Trends 2008 Trends 2009 Trends 2010 Trends 2011† SMR 2011 SMR 2012
HMO 25.6%* 53.8%* 62.4%* 39.2%* 78.1% 72.2%*
PPO/HDP 91.4% 80.8% 86.3% 80.1% 72.2% 85.6%
Indemnity 86.6% 87.3%* 90.1% 90.3%* 91.4%* 72.9%*

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from PPO/HDP at p < .05.
Note: Percentage is calculated as the percentage of filings with an “approved” status among the filings for which the regulatory disposition was known. Filings from “file and use” states are not included in the analysis.

In the small group market, shown in Table 28, there were few differences in approval ratings across product types. In 2011, there were no significant differences between the three types, although HMO plans had slightly lower approval rates (74.9 percent vs. 80.1 percent for PPO) as did Indemnity plans (73.5 percent vs. 80.1 percent for PPO). In 2012, only Indemnity plans were significantly different, approving increases at a rate of 91.0 percent compared to only 76.1 percent for PPO. There were no significant differences between HMO and PPO plans in the small group market.

Table 28: Percentage of Premium Increases Approved, by Year, by Product Type – Small Group

Product Type Trends 2008 Trends 2009 Trends 2010 Trends 2011† SMR 2011 SMR 2012
HMO 87.1% 40.7%* 76.7%* 70.6% 74.9% 74.9%
PPO/HDP 82.8% 78.0% 65.4% 69.6% 80.1% 76.1%
Indemnity 79.3% 97.7%* 63.4% 56.9% 73.5% 91.0%*

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from PPO/HDP at p < .05.
Note: Percentage is calculated as the percentage of filings with an “approved” status among the filings for which the regulatory disposition was known. Filings from “file and use” states are not included in the analysis.

We additionally explored the association between market concentration (see Appendix A for the classification of each state’s market concentration) and percentage of rate requests approved. In the individual market (Table 29), higher-market concentration states had the highest approval ratings in both 2011 and 2012, significantly higher than medium-concentration states both years. In 2011, low-concentration states also had a significantly higher approval rate, approving 79.6 percent compared to 61.2 percent for medium-concentration states, and high-concentration states approving 89.4 percent of premium increases. In 2012, high-concentration states had significantly higher approval ratings than medium-concentration states, approving 99.0 percent of premium increases compared to only 81.1 percent for medium-concentration states. In the small group market (Table 30), there were no significant differences between states of different market concentrations in either of the study years.

Table 29: Percentage of Premium Increases Approved, by Market Concentration, by Year - Individual/Conversion

Market Concentration Trends 2008 Trends 2009 Trends 2010 Trends 2011† SMR 2011 SMR 2012
Low 77.7%* 80.3%* 75.9%* 85.2%* 79.6%* 81.7%
Medium 62.1% 72.1% 88.1% 45.5% 61.2% 81.1%
High 100.0%* 99.6%* 100.0%* 100.0%* 89.4%* 99.0%*

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from medium concentration at p < .05.
Note: Percentage is calculated as the percentage of filings with an “approved” status among the filings for which the regulatory disposition was known. Filings from “file and use” states are not included in the analysis.

Table 30: Percentage of Premium Increases Approved, by Market Concentration, by Year – Small Group

Market Concentration Trends 2008 Trends 2009 Trends 2010 Trends 2011† SMR 2011 SMR 2012
Low 90.5% 71.7%* 76.7%* 73.9%* 80.2% 79.7%
Medium 67.5% 42.8% 43.7% 52.2% 83.6% 75.8%
High N/R N/R N/R N/R 52.9% N/R

Note: Entries with fewer than five filings are not reported (N/R).
† Data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from medium concentration at p < .05. Note: Percentage is calculated as the percentage of filings with an “approved” status among the filings for which the regulatory disposition was known. Filings from “file and use” states are not included in the analysis.

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