U.S. Department of Health and Human Services: Rate Review Annual Report September 2013. Individual Market

09/01/2013

Based on information from 39 states from the individual market, the estimated national average rate increase implemented in the individual market in 2012 is approximately 12 percent lower than the increase originally requested by insurance companies.  Based on 2012 individual market premium data for all states, this difference equates to about $311 million in savings to consumers.  For the 39 states, 30.5 percent of total covered lives had rate change requests reduced or denied.  Extrapolating to the total number of 11.1 million covered lives in the individual market, an estimated 3.4 million individuals had rate change requests reduced or denied.

Figure 1: Rate Change Requested Versus Rate Change Implemented in the Individual Market
Individual Market Rate Change, 2012 Requested Implemented
Sources:  Revised State Rate Review Grant (RRG) data and data from state websites plus data from Florida (non-grant state)
Number of rate filings in 39 states 832 832
Number of covered lives affected by these rate filings 7,024,186 7,024,186
Average rate change for 39 states 8.1% 7.1%
Average rate change when request >=10% for 39 states 14.2% 12.1%
% filings with rate change requested >=10% for 39 states 26.1% 21.8%
% covered lives with rate change requested>=10% for 39 states 22.8% 16.7%
% covered lives with rate change request reduced or denied   30.5%
Total covered lives with rate request change reduced or denied based on 11.1 million total covered lives for all states   3.4 million
Total U.S. savings based on $31.1 billion total premiums in individual and small group markets for all states   $311 million

Premium and covered lives data are based on the Medical Loss Ratio (MLR) annual reports4 for all 50 states and the District of Columbia, whereas the average increase in premiums is based on ASPE’s analysis of 38 states using Rate Review Grants (RRG) Program data, plus Florida, a non-grant state, using data available on Florida’s Office of Insurance Regulation website.  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 national savings estimates for consumers in the individual market resulting from rate review.5

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