Rate Review Annual Report for Calendar Year 2013. Individual Market

09/01/2014

Estimated Reduction in Premiums: For these 40 states in 2013, 23.7 percent of total covered lives were in policies that had rate change requests reduced or denied. We used this percentage to make an estimate for all 50 states and the District of Columbia by applying it to 2013 Medical Loss Ratio (MLR) data for covered lives in the individual market in all 51 jurisdictions. The MLR data for the individual market in 2013 shows 10.9 million covered lives and total premiums of $32.3 billion. An estimated 2.6 million covered lives (or 23.7 percent of the nationwide total), had rate change requests reduced or denied. Based on 2013 MLR data for total individual market premiums in all states, rate review caused total premiums in the individual market to be reduced by approximately $290 million. We calculated this estimated 8 percent reduction by multiplying the difference between the average rate increase initially requested (11.2 percent) and the average rate increase implemented (10.3 percent) in those 40 states by the nationwide total 2013 premiums of $32.3 billion.6

Requested Rate Increases of 10 Percent or More: One quarter (25 percent) of rate filings in the individual market in 2013 contained requested rate increases of 10 percent or more and 23.1 percent of rate filings contained implemented rate increases of 10 percent or more. Rate increases of 10 percent or more affected a larger share of covered lives in the individual market than in the small group market. In the individual market, 42 percent of covered lives had an average requested rate increase of 10 percent or more and 41 percent had an implemented rate increase of 10 percent or more. Table 1 summarizes the results for the individual health insurance market.

Table 1: Rate Change Requested Versus Rate Change Implemented in the Individual Market (Based on Analysis of 40 States)

Individual Market Rate Change, 2013 Requested Implemented7
Number of rate filings in 40 states 647 647
Filings with rate change requested≥ 10% for 40 states (%) 25.0% 23.1%
Average rate change:

For 40 states

11.2% 10.3%

When request ≥10% for 40 states

18.4% 16.9%
Covered Lives:

Number of covered lives affected by these rate filings

6,918,000 6,918,000

Covered lives with rate change requested ≥10% for 40 states (%)

42.0% 41.0%

Covered lives with rate change request reduced or denied (%)

  23.7%
Total covered lives with rate request change reduced or denied based on 10.9 million total covered lives for all states   2.6 million
Total U.S. estimated reduction in premiums based on $32.3 billion total premiums in the individual market for all states   $290 million
Sources: Revised State Rate Review Grant (RRG) data and data from state websites8
Rate Change Requested Versus Rate Change Implemented in the Individual Market (Based on Analysis of 40 States)


Number of rate filings in 40 states

Number of rate filings in 40 states
Req647
Imp647

Filings with rate change requested≥ 10% for 40 states (%)

Filings with rate change requested≥ 10% for 40 states (%)
Req25.0
Imp23.1

Average rate change for 40 states

Average rate change for 40 states
Req11.2
Imp10.3

Average rate change when request ≥10% for 40 states

Average rate change when request ≥10% for 40 states
Req18.4
Imp16.9

Number of covered lives affected by these rate filings

Number of covered lives affected by these rate filings
Req6918000
Imp6918000

Covered lives with rate change requested≥10% for 40 states (%)

Covered lives with rate change requested≥10% for 40 states (%)
Req42.0
Imp41.0

 


6 Premium and covered lives data are based on the 2013 Medical Loss Ratio (MLR) data submitted by issuers to CCIIO (available at http://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html) for all 50 states and the District of Columbia, whereas the average rate increase is based on ASPE’s analysis of 40 states using Rate Review Grants (RRG) Program data and/or state website data for 38 grantee states and state website data for two non-grantee states (Florida and Oklahoma). RRG Program data was supplemented by state website data whenever such data was publicly available. Ten grantee states that submitted limited RRG Program data for 2013 were not included in the analysis. Taking the average difference between rate changes requested and rate changes implemented, weighted by the number of covered lives, and multiplied by the estimated total U.S. premiums, this report extrapolates an estimated total reduction in premiums in the individual market resulting from rate review, assuming that states without available data are similar to states that reported data.

7 Rate Change Implemented includes modifications (increases and decreases) and denials.

8 The individual market data are based on MLR data from 50 states and the District of Columbia (accessed at http://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html), whereas the average difference between rate changes requested and rate changes implemented is taken from ASPE’s analysis of 40 states using Rate Review Grants (RRG) Program data and/or state website data for 38 grantee states and state website data for two non-grantee states (Florida and Oklahoma). The results were extrapolated to approximate a national total premium reduction for the individual market as a result of rate review. See footnote 7 for more detail.

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