Obamacare-driven competition lowering rates in some states

Introduction

Candidates who had planned to run against Obamacare this fall and use skyrocketing rate increases as an “I-told-you-so” talking point may not have as much to work with as they had hoped.

While health insurers in some states will indeed increase the cost of their policies, early evidence suggests that most increases won’t be any higher than they were before the Affordable Care Act was passed. And millions of Americans will be able to pay considerably less next year for the exact same coverage they have now.

A big part of the reason that many people will be able to get better deals is increased competition.

Most of the big for-profit health insurers, ever mindful of their bottom lines and profit margins, decided to offer policies on the new health insurance exchanges in only a few states last year. Now that they have a better understanding of the new marketplace that the ACA established, they’re jumping in, at least where they think they can make money.

Leading the pack is UnitedHealth Group, the country’s biggest health insurer. The company offered 2014 policies in only about a dozen states. During a call with investors last week, UnitedHealth CEO Stephen Hemsley said the company will compete for 2015 Obamacare business in twice that many states.

“We want to make sure we don’t go in too late,” he said. “We’re thinking this is about the right time.”

Even the nonprofit co-op plans that debuted in about half the states this year are expanding into new markets. Residents of New Hampshire, Idaho and West Virginia will have co-ops to choose from for the first time when the Nov. 15 open enrollment date for 2015 coverage arrives, thanks to co-ops in neighboring states opting to cross state lines. Ohioans will also have a new co-op to choose from. And based on preliminary rate filings, the Ohio co-op, InHealth Mutual, is besting its established competitors by almost 25 percent.

Here’s what’s expected in a handful of states where information is available, based on published reports of preliminary filings and company announcements:

• Colorado: Anthem Blue Cross Blue Shield says it wants to lower rates by an average of 5.1 percent while two nonprofit carriers, Colorado Access and Colorado HealthOP, plan to reduce premiums by 22 and 9.63 percent, respectively.

   

• Maryland: While CareFirst is seeking a whopping 28 percent average increase to its individual rates, it likely will lose customers to Kaiser Permanente and Evergreen Health Cooperative, both of which are saying they will reduce premiums for 2015 coverage.

   

• Oregon: Oregon’s Health CO-OP is seeking a 16 percent decrease in premiums for its gold-level plans while a competitor, Health Republic, is proposing to increase rates for comparable coverage by 13 percent. Overall, Oregon’s Health CO-OP says it plans to cut premiums by 21 percent.

   

Residents of some states may not find lower-cost plans, of course, especially if the dominant plans kept their rates artificially low for 2014 in order to undercut competitors or if the states’ regulators allowed policyholders to remain in their non-ACA-compliant plans for an additional year.

In Iowa, for example, CoOpportunity Health notified customers that it would seek a 14.3 percent increase for 2015. Coventry Health Care said it would also seek a rate increase for its Iowa customers. CoOpportunity blamed its proposed increase on a marketplace distorted by the state’s decision to allow “grandfathered” plans to be sold for another year.

Tennessee residents were able to take advantage of some of the country’s lowest rates this year, primarily because Blue Cross Blue Shield of Tennessee — which has an 88 percent market share — priced their policies too low to make a profit. Now the company is seeking a 19 percent increase.

Company spokesman Roy Vaughn said the rate increase would allow the company to “break even” in 2015.

The Blue Cross plan in Georgia, however, which priced its policies considerably higher than it’s counterpart in Tennessee, has requested an average decrease in premiums of 7 percent.

The big unknown at this point is what will happen to rates in the new states where UnitedHealth will offer coverage on the exchanges for the first time. If the company proposes rates lower than competitors, we can expect those competitors to adjust their premiums downward.

Whether people will actually shop for the best deals remains to be seen. The federal government recently announced that most folks who enrolled in coverage through the exchanges in 2014 would be automatically re-enrolled for 2015 unless they take action to change plans. It’s clear that many of them could save some serious money if they look at the new options that will be available in many states.