Effects of Implementing State Insurance Market Reform, 2011-2012. Relationships of Carrier Size, Market Concentration, and Premium Increases

06/07/2013

In both 2011 and 2012 in the individual market, there were no significant differences in average premium increases between large carriers (the three largest in the state’s individual market, using NAIC data) and other carriers. Over the two study years, cumulative premium increases in large carriers were about 1.1 percentage points greater than for smaller carriers (Table 20), although this difference was not statistically significant.

Table 20: Rates of Premium Increase, by Year, by Carrier Size - Individual/Conversion

Carrier Size Starting index =100 2008 increase Trends 2009 increase Trends 2010 increase Trends 2011 increase Trends† Cumulative Increase Trends† 2011 increase SMR 2012 increase SMR Cumulative Increase SMR
Top 3 Carrier 100 11.3% 10.0% 11.4% 8.6% 137.2 7.1% 7.2% 114.8
Other Carrier 100 7.5%* 12.6%* 13.2%* 8.9% 149.4* 6.5% 6.8% 113.7
All plans 100 9.9% 10.8% 11.7% 8.6% 147.6 7.0% 7.1% 114.6

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from Top 3 Carrier at p < .05.

We found a similar result in the small group market, in which there were no significant differences in average premium increase between large and other carriers in either of the study years. Over the two study years, the cumulative increase for the top three carriers was about 1.0 percentage point less than the cumulative increase for other carriers (Table 21), although this difference was not statistically significant.

Table 21: Rates of Premium Increase, by Year, by Carrier Size – Small Group

Carrier Size Starting index =100 2008 increase Trends 2009 increase Trends 2010 increase Trends 2011 increase Trends† Cumulative Increase Trends† 2011 increase SMR 2012 increase SMR Cumulative Increase SMR
Top 3 Carrier 100 9.2% 12.6% 8.9% 4.3% 142.2 5.8% 4.8% 110.9
Other Carrier 100 14.4%* 9.4%* 8.7% 10.5%* 145.8 6.7% 4.9% 111.9
All plans 100 11.2% 11.2% 8.8% 6.7% 143.6 6.1% 4.8% 111.2

† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from Top 3 Carrier at p < .05.

In the individual market, states with medium market concentration – those in which the largest carrier accounts for 50-79 percent of the member-months in the market – had significantly higher premium increases in 2011 than states with high concentration, in which the largest carrier holds 80 percent or more of the market. This difference was not statistically significant in 2012. Over the two-year study period, premium increases for carriers in medium-concentration states increased about 6.3 percent more than in states with high concentration (Table 22). This difference was statistically significant.

Our comparison of medium and low market concentration states produced more equivocal results. States with low concentration had significantly lower premium increases than medium-concentration states in 2011. However, in 2012, low-concentration states had significantly higher premium increases than medium-concentration states. Over the two-year study period, premium increases for carriers in mediumconcentration states increased about 2.1 percent more than in low-concentration states (Table 22). This difference was statistically significant.

Table 22: Rates of Premium Increase, by Year, by Market Concentration - Individual/ Conversion

Market Concentration Starting index =100 2008 increase Trends 2009 increase Trends 2010 increase Trends 2011 increase Trends† Cumulative Increase Trends† 2011 increase SMR 2012 increase SMR Cumulative Increase SMR
Low 100 9.6%* 10.2%* 10.9%* 8.6%* 137.2* 6.3%* 8.1%* 114.9*
Medium 100 11.5% 11.5% 12.4% 9.6% 149.4* 10.3% 6.1% 117.0
High 100 8.2%* 10.6% 11.8% 6.5%* 150.4* 5.3%* 5.1% 110.7*
All plans 100 9.9% 10.8% 11.7% 8.6% 147.6 7.0% 7.1% 114.6

Note: Entries with fewer than five filings are not reported (N/R).
† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from Medium Market Concentration at p < .05.

In the small group market, states with medium market concentrations had significantly lower premium increases in 2011 and 2012 than states with low or high-concentrations. Over the two-year study period, premium rates for carriers in low-concentration states increased about 9.0 percent more than in mediumconcentration states. Premiums increased for carriers in high-concentration states about 7.9 percent more than in medium-concentration states. Both differences were statistically significant (Table 23).

Table 23 also shows the trend from 2011 to 2012 for low, medium and high-concentration states. Highand medium-concentration states saw premium growth rates increase in this period, but low-concentration states saw premium growth rate decline. Appendix A provides data for each state in the sample on the level of market concentration for the individual and small group markets including its concentration classification.

Table 23: Rates of Premium Increase, by Year, by Market Concentration – Small Group

Market Concentration Starting index =100 2008 increase Trends 2009 increase Trends 2010 increase Trends 2011 increase Trends† Cumulative Increase Trends† 2011 increase SMR 2012 increase SMR Cumulative Increase SMR
Low 100 10.2% 11.1% 9.3% 7.1%* 142.2 7.9%* 5.3%* 113.6*
Medium 100 14.5% 11.8% 7.4% 4.7% 145.8 1.8% 2.7% 104.6
High 100 N/R N/R N/R 2.6% 142.2 3.9%* N/R 112.5*
All plans 100 11.2% 11.2% 8.8% 6.7% 143.6 6.1% 4.8% 111.2

Note: Entries with fewer than five filings are not reported (N/R).
† Trends data for 2011 are incomplete (see Methods section).
* Estimate is significantly different from Medium Market Concentration at p < .05.

 

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