Premiums Rose 2.9% for the Most Popular ACA Plans

Using plan data as of November 2014, researchers at the Urban Institute determined that the national average premium increase was 2.9% over the previous year, according to a new report.

John Holahan, Linda J. Blumberg, and Erik Wengle used data on the lowest-cost silver plan and retrieved premium information from HealthCare.gov and the state marketplace websites. Two-thirds (65%) of enrollees chose a silver plan with the lowest-cost and second-lowest-cost plans being the most popular.

The West saw the lowest premium increase of only 1.4%, followed by 1.8% in the Northeast. However, premium increases were steeper in the Midwest (3.5%) and the South (5.4%). According to the findings, 60% of the South’s population lives in a region where premiums for lowest-cost silver plans increased by 5% or more.

“Whether marketplaces will continue to see aggressive pricing and small premium increases in the future is uncertain,” they wrote.

In the Northeast, New Hampshire and Rhode Island had exceptionally large reductions in premiums costs. New Hampshire’s silver plan premiums fell 17.5% after 4 new insurers entered the market, and in Rhode Island, premiums fell 10.9% when the Neighborhood Health Plan expanded its market presence and reduced its premiums.

In the South, premium increases can be attributed to the fact that many health insurance markets have few competitors and are dominated by Blue Cross Blue Shield affiliates.

While the West had the smallest increase in premiums, the region actually had considerable variability. Decreases in half the states offset the large increases the remainder experienced.

Although most states in the Midwest saw decreases or small increases in the price of premiums for the lowest-cost silver plans, Michigan and Minnesota had larger increases.

The investigators found that 237 out of 497 rating regions (47%) had a change in the lowest-cost silver plan insurer in 2014, which means many people will have to change insurers to benefit from decreases or small increases in premiums. This plan switching should decline over time as insurers finalizing their pricing strategies, though.

The authors broke down premium increases by selected cities in each region and found that the cities with the biggest reduction in lowest-cost silver plan premiums were Denver, Colorado (-15.7%); Phoenix, Arizona (-14.5%); Seattle, Washington (-12.2%); Albuquerque, New Mexico (-11.3%); and Rochester, New York (-11.3%). Meanwhile, the cities with the largest increases were Minneapolis, Minnesota (17.9%); Detroit, Michigan (15.2%); Miami, Florida (11%); Portland, Oregon (9.3%); and San Diego, California (9%).

“As we have shown, however, many people must be willing to change plans and insurers to take advantage of the lowest premiums,” the authors concluded. “Without plan switching, competitive pressures on insurers will weaken.”