Trends in Premiums in the Small Group and Individual Insurance Markets, 2008-2011. Relationships of Carrier Size, Market Concentration, and Premium Increases

11/06/2012

In the individual market, large carriers (the three largest in the state’s individual market) had greater premium increases in 2008 than other carriers and smaller premium increases in 2009 and 2010 (Figure 8). Over the four study years, cumulative premium increases were comparable between large carriers and other carriers (Table 16).

Table 16: Cumulative Rate Increases, by Carrier Size, by Market

Characteristic Starting index=100 2008 increase 2009 increase 2010 increase 2011† increase Cumulative Increase
Individual/ conversion
Top 3 Carrier 100 11.3% 10.0% 11.4% 8.6% 147.9
Other Carrier 100 7.5 12.6 13.2 8.9 149.1
All plans 100 9.9% 10.8% 11.7% 8.6% 147.6
Small group
Top 3 Carrier 100 9.2 12.6 8.9 4.3 139.6
Other Carrier 100 14.4 9.4 8.7 10.5 150.3*
All plans 100 11.2% 11.2% 8.8% 6.7% 143.6

† Data from 2011 are incomplete.
* Estimate is significantly different from Top 3 Carrier at p < .05.


In the small group market, large carriers had significantly smaller premium increases for two of the four years, with 2009 showing the opposite difference (Figure 9). Over the four study years, the cumulative increase for “other” carriers was about 10 percentage points higher than for top three carriers (Table 16).

Figure 8: Rates of Premium Increase, by Year, by Carrier Size - Individual/Conversion

Figure 8: Rates of Premium Increase, by Year, by Carrier Size - Individual/Conversion

† Data for 2011 are incomplete.
Estimate is significantly different from Top 3 Carriers at p < .05.


Figure 9: Rates of Premium Increase, by Year, by Carrier Size - Small Group

Figure 9: Rates of Premium Increase, by Year, by Carrier Size - Small Group

† Data for 2011 are incomplete.
* Estimate is different from Top 3 Carriers at p < .05.


Market concentration did not have a straightforward association with premium trends in a simple two-way analysis. In the individual market, states with medium market concentration – defined as the largest carrier accounting for 50-79 percent of the market’s member-months – had significantly higher premium increases than both states with high-concentration and low-concentration markets for 2008 and 2011, and higher premium increases than states with low-concentration markets for 2009 and 2010 (Figure 10). Appendix B provides data for each state in the nation on the level of market concentration for the individual and small group markets including its concentration classification. Low, medium, and high concentration markets all had significantly lower premium increases from 2010 to 2011. In the individual market over the four-year study period, premium increases for carriers in medium concentration states increased eight percentage points more than in states with low market concentration, and 11 percentage points more than in high market concentration states (Table 17).

Table 17: Cumulative Rate Increases, by Market Concentration, by Market

Characteristic Starting index=100 2008 increase 2009 increase 2010 increase 2011† increase Cumulative Increase
Individual/ conversion
Low Market Concentration 100 9.6% 10.2% 10.9% 8.6% 147.9
Medium Market Concentration 100 11.5 11.5 12.4 9.6 149.1
High Market Concentration 100 8.2 10.6 11.8 6.5  
All plans 100 9.9% 10.8% 11.7% 8.6% 147.6
Small group
Low Market Concentration 100 10.2 11.1 9.3 7.1 139.6
Medium Market Concentration 100 14.5 11.8 7.4 4.7 150.3*
High Market Concentration 100 N/R N/R N/R 2.6  
All plans 100 11.2% 11.2% 8.8% 6.7% 143.6

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


Figure 10: Rates of Premium Increase, by Year, by Market Concentration - Individual/Conversion

Figure 10: Rates of Premium Increase, by Year, by Market Concentration - Individual/Conversion

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


In the small group market, there were an inadequate number of carrier filings from states with high market concentration to allow for reporting (Figure 11), while small sample sizes from the medium concentration states produced wide confidence intervals. States with medium concentration had significantly lower premium increases in 2011 when compared with low concentration states, with cumulative premium increases comparable between medium concentration states and low concentration states.

Figure 11: Rates of Premium Increase, by Year, by Market Concentration - Small Group

Figure 11: Rates of Premium Increase, by Year, by Market Concentration - Small Group

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

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