HIX plan premiums won’t firm until 2016

Premium rates published by a number of states for health insurance exchange plans appear to be lower than originally expected, but experts anticipate it won't last. Most say insurers won't become sufficiently familiar with the populations they serve to align affordability and plan variety until at least 2016.
"If you look at rates in the individual market, they are likely to go up compared with what we see today, especially for younger people," said Jenna Stento, senior manager in the Health Reform Practice of Avalere Health.
Exchange plans are categorized as precious metals - bronze, silver, gold or platinum - with lower premium plans having higher out-of-pocket costs in deductibles, co-pays and cost-sharing. All plans must offer essential health benefits.
The Affordable Care Act (ACA) limits how much insurers can raise rates according to increased patient age. The most expensive plans may only be three times the price of the least expensive ones. That means older, sicker individuals may pay less than they otherwise would have, and younger, healthier people may pay more in 2014 than 2013.
Premiums will vary across states between $50 and $100 or more a month for a similar plan, much like today, Stento said. "Despite new requirements at the federal level, much of it still falls to state regulatory decisions, state benefit designs and the local dynamics in the marketplace," she said.
A large part of the population coming to the exchanges will be highly cost conscious and predominantly uninsured, Stento said. "So if you enroll in a bronze plan, you can expect an average patient pays 40 percent of the cost out of pocket compared with the platinum plan, which is 10 percent," she said. "The premium is going to be a large driver in the decision to enroll."
The lowest rates for silver plans in 10 states and the District of Columbia are clustering around $300 a month, said Linda Blumberg, senior fellow at the Urban Institute, during a recent Alliance for Health Reform webinar. To put it in perspective, the employer single premiums average in 2014 is about $516 a month, she said. And a large number of exchange enrollees will be eligible for tax credits.
Premiums will vary by location because of the differences in medical spending standards and states' different choices for essential benefit benchmark plans. The level of competition in both insurer and provider markets also differs significantly. "These differences have long preceded the ACA. Much of it will persist after full implementation of the law," Blumberg said.
Some insurers are already modifying their rates after seeing competitors' rates, in order to remain competitive, she said.
Tom Miller, resident fellow at the American Enterprise Institute, described the early premium reporting states as "eager beavers" that want to demonstrate lower rates under reform using a somewhat "artificial CBO extrapolated baseline."
"We're waiting to hear what the real rates are, but the early indications depend on what your assumptions are," he said in the Alliance for Health Reform webinar. "The second and third years may be very different."
Miller noted some issues that will affect future rates, including the impact of the individual mandate; the health status of those who enroll in the exchanges; the extent of Medicaid expansion; and how generous subsidies are for those with incomes above 200 or 250 percent of poverty level.
Blumberg said insurers are uncertain about the best pricing strategies. "In years two, three and beyond, insurers will have a better understanding of the healthcare characteristics of exchange enrollees."
Stento agreed. "I think we will have a volatile market for a few years - certainly through 2015."