Trends in Premiums in the Small Group and Individual Insurance Markets, 2008-2011. National Trends: Individual and Small Group Markets

11/06/2012

Over the study period, the rate of growth in premiums declined significantly in 2011 in both the individual and small group markets (Figure 3). In the individual market, the average premium increase was 9.9 percent in 2008, 10.8 percent in 2009, 11.7 percent in 2010, and 8.6 percent in 2011. The number of states with statistically significant declines in premium increases from 2010 to 2011 outnumbered those that increased or stayed level by 4:1. In contrast, in 2010, the number of states with statistically significant declines was roughly equal to the number of states with significant increases compared to 2009. In the small group market, premium increases in 2011 were significantly smaller than in prior years.25

Figure 3: Rate of Premium Increase, by Year and Market

Figure 3: Rate of Premium Increase, by Year and Market

† Data for 2011 are incomplete.
* Estimate is significantly different from 2011 at p < .05.


State-level estimates are reported (Table 14) for all years in which more than 50 percent of membermonths are represented by carriers included in the sample (see Table 10). With smaller sample sizes in individual states one would expect more volatility from year to year at the state level than nationally. However, a number of states had continuous declines or no rise in premium increases from year-to-year. Among these states in the individual market were Alabama, Illinois, Kentucky, Maine, and Minnesota. Premiums increased at double-digit rates in Wisconsin every year, and in Colorado, Nebraska, South Dakota, and Washington in every year for which there were reportable data. Premiums increased at single-digit rates in Kentucky every year, and in Idaho and Pennsylvania in every year for which there were reportable data.

Table 14: Premium Increases in Individual and Small Group Markets, by Year, Nationally and by State, 2008-2011

State Individual/ Conversion 2008 Individual/ Conversion 2009 Individual/ Conversion 2010 Individual/ Conversion 2011† State Small group 2008 Small group 2009 Small group 2010 Small group 2011†
MEAN US 9.9%* 10.8%* 11.7%* 8.6% MEAN US 11.2%* 11.2%* 8.8%* 6.7%
AL . 17.5%* 10.8%* 9.0% AL 9.0%* 8.9% 8.7%* 2.6%
AR N/R N/R N/R 7.2% AR . . . .
CA . N/R 15.7%* 7.3% CA . N/R N/R 8.0%
CO N/R N/R 16.4%* 10.9% CO N/R 4.9%* 8.0%* 3.8%
CT . 20.1%* N/R 8.2% CT N/R . 16.1%* N/R
FL 8.2%* 8.9% 13.6%* 9.6% FL 17.7%* 13.3%* 11.6%* 5.0%
HI . N/R . . HI 8.7% N/R . N/R
IA 2.8%* 7.3%* 18.4%* 10.1% IA N/R . . N/R
ID N/R 6.9% 3.0% N/R ID N/R 2.8% N/R N/R
IL 14.4% 10.4% 9.6% . IL . . . .
IN 13.5% 15.1% 8.2% N/R IN N/R 20.1%* (1.2)% 1.7%
KS . N/R N/R . KS . N/R N/R N/R
KY 8.1%* 7.1%* 5.5%* 2.8% KY (0.4)%* 3.7%* 5.4% 6.1%
MA . . . . MA . . . N/R
MD N/R N/R N/R N/R MD 1.6% 12.4% 0.7% .
ME N/R 11.0%* 11.1%* 5.2% ME . N/R N/R 16.5%
MI N/R N/R N/R N/R MI . . . .
MN N/R 10.7%* 7.4% 7.3% MN N/R N/R 2.6% (0.3)%
NC N/R N/R 11.6%* 5.2% NC 33.7% 9.8% 15.7% .
NE . N/R 21.8%* 10.1% NE . . N/R N/R
NJ . 4.1%* 10.8%* 12.7% NJ 14.3% 18.8%* 20.6%* 14.5%
OH N/R N/R N/R N/R OH . N/R 5.6%* (0.4)%
OK N/R 8.2% 13.0%* 9.9% OK . . . .
OR 12.2%* 15.2%* 14.9%* 9.0% OR 4.7% 6.1% 12.7%* 6.0%
PA N/R N/R 9.0%* 6.9% PA N/R N/R N/R N/R
RI N/R N/R N/R . RI . . 1.3%* 11.6%
SD N/R 14.1% 16.2% . SD . . . .
VA . 13.8% 8.9% . VA . N/R 0.0% 0.3%
WA N/R N/R 12.8%* 11.2% WA . N/R 4.2% N/R
WI 14.7%* 11.1% 14.0%* 11.8% WI . . . N/R

† Data for 2011 are incomplete.
* Estimate is significantly different from 2011 at p < .05.
Note: Some estimates are not reportable (N/R) because the proportion of state member months is less than 50%. The mean US figure is a weighted average.


In the small group market, average premium increases steadily declined from 2008 to 2011. Premium increases were 11.2 percent in 2008, 11.2 percent in 2009, 8.8 percent in 2010, and 6.7 percent in 2011 (see Figure 3), with these trends varying significantly by state. In New Jersey, for instance, premiums increased at double-digit rates each year (see Table 14). The rate of premium increase in Alabama and Florida declined each year. Other states had low overall premium increases, with Alabama and Kentucky seeing rate increases in the single digits each year, and Colorado and Oregon seeing single-digit rate increases in three of the four years.


25 Other studies on premium increases in the small group market include the Kaiser Family Foundation/Health Research and Educational Trust Employer Health Benefits Survey. In comparison to that study, our analyses exclude self-insured firms; define the small group market as firms from 3-49 employees, whereas they aggregate firms with 3-199 employees as “small firms”; and consider the “model” price submitted by carriers to state regulators, rather than the actual prices charged to employers, which may include regional, occupational, and other risk-factor-based adjustments. Estimating the net effects of these differences is outside the scope of this project.

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