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

As part of the Rate Review Grants Program, HHS collects data on all rate increases, even those below 10 percent, from every state that received a grant.³  Figure 1 summarizes the results for the individual health insurance market.  Figure 2 summarizes the results for the small group insurance market.

• Individual Market

  • 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

• Small Group Market

  • In the small group market, analysis of the information from 35 states indicates that the implemented rate increases are approximately 19 percent lower than the rates originally requested by insurance companies.⁶  This difference equates to approximately $866 million in savings to consumers based on 2012 small group market premium data.  For the 35 states, 18.7 percent of total covered lives had rate requests reduced or denied.  Extrapolating to the total number of 18.1 million covered lives in the small group market, an estimated 3.4 million individuals had rate requests reduced or denied.

    As with the individual market data, the small group premium data are based on MLR data from 50 states and the District of Columbia,⁷ whereas the average difference between rate changes requested and rate changes implemented is taken from ASPE’s analysis of 35 states in the small group market using RRG data and data from Florida, a non-grant state.  Again, the results were extrapolated to approximate a national savings total for the small group market as a result of rate review.

    Figure 2: Rate Change Requested Versus Rate Change Implemented in the Small Group Market

    Small Group 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 35 states	772	772
    Number of covered lives affected by these rate filings	10,938,053	10,938,053
    Average rate change for 35 states	5.8%	4.7%
    Average rate change when request >=10% for 35 states	16.3%	9.7%
    % filings with rate change requested >=10% for 35 states	14.0%	11.7%
    % covered lives with rate change requested >=10% for 35 states	14.7%	9.3%
    % covered lives with rate change request reduced or denied		18.7%
    Total covered lives with rate change request reduced or denied based on 18.1 million total covered lives for all states		3.4 million
    Total U.S. savings based on $78.7 billion total premiums for all states		$866 million

    Total premiums in the individual and small group markets were lower by an estimated $1.2 billion compared to the total premiums initially requested.

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