CHA News Article

KFF Report Examines 2015 Premium Changes in Health Insurance Marketplaces

The Kaiser Family Foundation (KFF) has issued an analysis of premium changes in marketplace plans for individuals in 15 states plus the District of Columbia, where it was able to find comprehensive data on rates or rate filings for all insurers. Since premiums vary substantially across geographic rating areas even within a state (there are 500 rating areas nationwide), KFF examined premium changes in the rating area that includes a major city in each state. The analysis also includes an examination of the premium changes for the lowest-cost bronze plan and the two lowest-cost silver plans available in each state.               

As KFF notes, the lowest-cost bronze and silver options are particularly noteworthy for a number of reasons, including:

  • The lowest-cost bronze plan in an area is generally the least expensive option someone without employer-based coverage can choose to satisfy the Affordable Care Act’s requirement to either have insurance or pay a penalty.
  • The second-lowest-cost silver plan is the benchmark plan for tax credits provided to individuals who purchase coverage in the marketplaces and who have incomes of 100 to 400 percent of the federal poverty level (FPL) ($23,850 to $95,400 for a family of four). Through these tax credits, eligible individuals pay 2 to 9.5 percent of income on a sliding scale to enroll in the second-lowest-cost silver plan, and the federal government covers the difference. This range increases slightly in 2015, to 2.01 percent to 9.56 percent. However, poverty levels have also increased, meaning that someone with the same dollar income as in 2014 will be at a lower percentage of poverty in 2015 and will, therefore, pay a smaller share of their income towards the premium. Eighty-five percent of individuals signing up for a plan through the marketplaces receive tax credits.
  • Individuals with incomes up to 250 percent of the FPL are also eligible for cost-sharing subsidies that lower their deductibles and copays, but only if they enroll in a silver plan. Therefore, the lowest-cost silver plan is the option with the lowest premium that gives lower-income individuals access to cost-sharing subsidies.
  • Individuals purchasing coverage through the marketplaces this year gravitated toward lower premium plans.

In the cities KFF examined, the premium for the second-lowest-cost silver plan in the marketplaces – before taking any income-related tax credits into account – is decreasing an average of .08 percent (with premium changes ranging from a low of negative 15.6 percent to a high of 8.7 percent). Taking income-related tax credits into account shows how the subsidies have the effect of cushioning eligible individuals from premium increases. In nearly all of the 15 cities – even those that had a large increase before tax credits – a single 40-year old with an income of $30,000 per year would pay 0.8 percent less in 2015 than in 2014 to enroll in the second-lowest-cost silver plan (the 0.8 percent decrease is unrelated to the 0.8 percent average decrease in unsubsidized premiums; it is mere coincidence that the two numbers are similar).

KFF also analyzes the factors that may influence variations in premium changes, including accuracy in forecasting the health needs of enrollees, the composition of the risk pool, and competitive dynamics.

“While competitive forces are often driving premiums down, they are also resulting in significant volatility. People who were price-conscious and chose low premium plans this year – which was the norm – may find that their plan is no longer a low-cost option. Income-related tax credits protect low- and middle-income enrollees from substantial premium increases, but enrollees may need to switch plans to benefit from that protection,” notes KFF. According to the report, the findings highlight the importance of marketplace enrollees shopping around during the next open enrollment period (Nov. 15, 2014 – Feb. 15, 2015) because the marketplaces will auto-renew enrollees in their current plans and generally continue their estimated tax credits at the same level as in 2014, and many enrollees may be able to lower their premiums substantially by switching plans.

To review the state-by-state analysis, please see the attached report.