Effects of Implementing State Insurance Market Reform, 2011-2012. Trends by Product Type

06/07/2013

We determined that premium increases in the individual market varied by product type, but that this variation was inconsistent.35 In 2011, HMO products experienced significantly higher premium increases than PPO products. Indemnity products had similar rate increases compared to PPO products in 2011, but significantly lower rate increases in 2012 (Table 18). Cumulative increases in premiums from 2011 to 2012 were significantly higher for HMO products when compared to PPO products, with HMO products having cumulative increases approximately 2.3 percent higher than PPO products. Cumulative increases in premiums from 2011 to 2012 were approximately 4.3 percent lower for Indemnity products than for PPO products.

Our individual market results also show that none of the three product types had consistently high premium rate increases. In the individual market, all three product types had less than double-digit rate increases in both 2011 and 2012 (Table 18). Our results do not show a consistent trend from 2011 to 2012 by product type. HMO and Indemnity products had a decline in premium increase rate from 2011 to 2012, but PPO products had a slight increase. As noted earlier in this report, indemnity products make up a small share of the insurance market; the number of filings associated with each product type is included as Appendix B of this report.

Table 18: Rates of Premium Increase by Product Type, Individual/Conversion

Characteristic 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
HMO 100 6.9%* 9.1%* 9.8%* 7.1% 137.2* 8.9%* 7.0% 116.6*
PPO/HDP 100 9.9% 12.3% 12.3% 7.7% 149.4* 6.6% 7.2% 114.3
Indemnity 100 11.2%* 9.9%* 11.1%* 10.9%* 150.4* 6.5% 3.7%* 110.3*
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 PPO/HDP at p < .05.

We identified a clearer relationship between product type and premium increase rate in the small group market. In both 2011 and 2012, Indemnity products had significantly higher premium increase rates than PPO products (Table 19). In 2012, HMO products had a significantly higher premium increase rate than PPO products. In 2011, the HMO product increase rate was lower than the PPO rate, but this difference was not significant. Cumulative increases in premiums from 2011 to 2012 were significantly higher for Indemnity products than for PPO products, but the difference was not statistically significant between PPO and HMO products (Table 19).

In the small group market, HMO products had premium increase rates of less than 6 percent in both 2011 and 2012. However, Indemnity plan types had higher increase rates in both years. All three product types had a decline in premium increase rate from 2011 to 2012, although this decline was small for HMO and Indemnity products (Table 19).

Table 19: Rates of Premium Increase by Product Type, Small Group

Characteristic 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
HMO 100 7.2%* 10.8% 10.5%* 8.3%* 142.2 5.7% 5.6%* 111.6
PPO/HDP 100 14.4% 11.7% 8.0% 5.7% 145.8 6.1% 4.0% 110.4
Indemnity 100 12.7% 9.5% 9.6% 5.1% 142.2 10.4%* 9.8%* 121.2*
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 PPO/HDP at p < .05.


35 We believe that many plans that filed as indemnity plans are actually PPO plans with an indemnity license given that The Kaiser Family Foundation/Health Research and Educational Trust Employer Benefits Survey estimates indemnity market share in the employer-based market at 1 percent.

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