If it feels like we just got done talking about the closing of open enrollment for Obamacare, it's because we did. The deadline to enroll in 2014 ended on March 31, although select persons who were unable to enroll by the deadline were able to file an extension to complete their application.
All told, both state-run exchanges and the federally run Healthcare.gov got off to a rocky start, but the end result was a total enrollment figure which surged past 8 million when all was said and done, more than 1 million higher than even the loftiest estimates from the Department of Health and Human Services.
While this better-than-expected enrollment answered some questions, it also opened the door for a number of others, such as what would happen to pricing in the upcoming year. Even though open enrollment doesn't begin until after mid-term elections this year in November (Nov. 15 to be exact), insurers are expected to be on the ball and submit their 2015 health insurance premiums well ahead of time. Earlier this week, we got our first taste of 2015 pricing in select states, including my home state of Washington.
The good, the bad, and the surprising
According to The Seattle Times, and information obtained from filings submitted to the Office of the Insurance Commissioner, 13 state insurers -- some utilizing the state-run exchange and others operating outside the exchange -- submitted new rate information for 2015, with an additional four new plans expected to be introduced in the state, including one from the nation's largest health insurer, UnitedHealth Group (NYSE: UNH ) .
Of the 13 submitted rate requests, 12 of the 13 represented an increase. As you might anticipate, some of these rate requests were pretty exorbitant, such as Time Insurance, a division of Assurant (NYSE: AIZ ) , which requested a 26% boost in its premiums from 2014. It blamed an expected 9.5% increase in health-care service costs in 2015 as well as an expected influx in sicker enrollees as the primary reasons for its boost.
The majority of increases, however, were fairly moderate, ranging on the high-end from Group Health's Cooperative which called for an 11.2% increase and Kaiser's Health Plan of the Northwest which called for a minuscule 0.6% rate increase.
The real shock, however, was Molina Healthcare (NYSE: MOH ) which submitted plans to reduce premiums by 6.8% in 2015. According to Molina, it received a nice mix of healthy and sicker individuals in its 2014 individual market enrollment, and it only expects health care service costs to expand by 2% in the upcoming year. In other words, some 1,223 HMO customers could see their health premiums drop!
Some factors to keep in mind
However, there are some factors you'll want to keep in mind as we begin to see these initial 2015 premium figures.
First of all, these are estimates. This point is so important I'm going to repeat it again: these are estimates! What insurers have submitted are a starting point for discussion with the Office of the Insurance Commissioner, and they're quite liable to either go up or down from where the discussion began. The point here is that you shouldn't take these premiums as written in stone. We could easily see more insurers reducing their premiums, just as we could also see these rates, including Molina's, rise from their initial estimate.
The second point here is that a number of insurers were really shooting in the dark in 2014 when they entered the individual marketplace, so it's not unexpected to see wide variance in 2015's premium pricing. Molina Healthcare, for instance, has been a fixture in the government-sponsored health-care space for years, but made its first venture into the individual marketplace in Washington in 2014. It priced most of its plans based on its prior Medicaid knowledge, and based on that assumption appears to have possibly even overshot its premium needs last year based on its requested pricing drop in 2015.
Another factor to consider is that having a year in the books and data to pull off of could make state-run and federal marketplaces more competitive. UnitedHealth Group, for example, pulled out of a number of high-enrollment states because the costs to enter those markets would simply have been too great with so many apparent unknowns. A year later insurers have a better idea of what percentage of sick-versus-healthy individuals they can expect to enroll, as well as what tiers of pricing consumers prefer, which they may use to their benefit to enter new markets. UnitedHealth's proposal to enter Washington, along with Moda, Columbia United Providers, and Health Alliance Northwest may signify a greater willingness by insurers to take this leap of faith. As this happens more competition could lead to cost-competitive pricing which is one of the primary goals of Obamacare and would likely help consumers.
Could your premium drop in 2015?
The big question on everyone's mind this year, including my own, is whether or not our health insurance rates will drop. The answer is it's possible, but I wouldn't count on it.
Remember that Obamacare was never enacted to cause rates to necessarily drop, but merely to slow the natural inflation of medical costs. Just prior to the implementation of Obamacare, health costs were already rising well below their historical average, so Obamacare merely works as an added program devised to keep insurance rates from soaring.
However, higher-than-expected enrollment in 2014 and the fact that a number of inexperienced individual market insurers are essentially guessing could yield better-than-anticipated pricing for a number of consumers this year. This benefits consumers in their pocketbook, and could yield an added boost to insurers who may be viewed more favorably for not boosting their premiums. It wouldn't surprise me if Molina saw a modest boost in prospective 2015 enrollment solely on the idea that it's currently the lone insurer in Washington state poised to lower its premiums.
Correlating this to a baseball game, we're only in the bottom of the first inning when it comes to setting insurance rates for 2015, but the early signs look modestly promising for consumers in the coming year.
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