Premiums for insurance plans sold through the federal and state exchanges were lower than anticipated in 2014 and double-digit spikes shouldn't be expected next year, according to a new analysis by the Urban Institute and the Robert Wood Johnson Foundation.
Researchers scrutinized premium data for eight states. In each instance, they concluded that premiums were lower than comparable products that were available prior to establishment of the exchanges.
In Denver, for example, premiums in a small-group plan available before the launch of the exchanges averaged $440.50 per month. On the exchange, the average monthly premium for the cheapest silver plan (designed to cover 70% of medical costs) was roughly $220 per month for a 27-year-old and $375 for a 50-year-old.
John Holahan, a fellow at the Urban Institute's Health Policy Center and one of the report's authors, sees that as evidence that the markets spurred competition and insurers felt pressure to keep prices low to attract a sufficient customer base. “It doesn't seem to have worked as well in some rural markets where there isn't as much competition and you don't have a lot of leverage over providers,” Holahan said.
The report also determined that similar factors should keep rates from skyrocketing in 2015. There's already substantial evidence that more insurers will compete on the exchanges in 2015. Four additional carriers have submitted proposed rates in Washington state and three not-for-profit co-op insurers are expanding operations into neighboring states. UnitedHealthcare, the country's largest insurer, has indicated that it intends to compete more aggressively in 2015.
In addition, it's anticipated that the risk pools for the exchanges will become more balanced as they attract additional customers. The Congressional Budget Office projects that enrollment in commercial plans through the government-run marketplaces will expand to 15 million individuals next year, up from 8 million this year.
In states where insurers have already submitted proposed 2015 premium rates, they've ranged from an average spike of 25.5% for Humana plans in Arizona to a decrease of 6.8% for Molina Healthcare's products in Washington.
“There's going to be a little more certainty,” Holahan said of the 2015 market. “To the extent 2014 is a guide, there's no reason to believe premiums will skyrocket.”
Follow Paul Demko on Twitter: @MHpdemko
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