Average ACA benchmark premiums up 3.4%

Photo: Cavan Images/Getty Images

Average Affordable Care Act benchmark premiums have increased 3.4% for the 2023 coverage year according to a new analysis from the Robert Wood Johnson Foundation. 

It also found that premiums are greatly affected by the number of insurers competing in the rating region: The more insurers, the lower the benchmark premiums, and vice versa. For example, a region with one or two insurers had premiums that averaged $128 and $119 higher than regions with five or more insurers.

States with reinsurance waivers have lower published premiums because insurers receive some reinsurance payments in lieu of premium payments, the analysis found. And states that have adopted a state-based Marketplace tend to have lower premiums. Benchmark premiums also tend to be lower in urban areas, where more insurers typically participate.

Focusing on premium increases between 2022 and 2023, RWJF found that increases in the number of insurers in the rating region were associated with smaller increases in benchmark premiums. Plus, rating regions in states with Medicaid expansion, state-based marketplaces, and reinsurance programs also had smaller premium increases.

WHAT'S THE IMPACT

Examining changes in insurer participation, the analysis found increased entry among major commercial insurers such as UnitedHealthcare, Aetna, Cigna and Oscar in the last seven years. This growth follows earlier years in the ACA, when Medicaid insurers expanded their participation. 

It also found increases in the number of provider-sponsored plans, as well as considerable movement toward health maintenance organizations, including exclusive provider organizations, and other closed network products: Almost all benchmark premiums are plans offered by HMOs as opposed to preferred provider organizations, point-of-service plans and other similar network types with out-of-network coverage.

Looking at localities in 43 rating regions in 28 states to focus on changes at the individual market level, RWJF found that Medicaid insurers led by Centene, CareSource and Molina were almost always among the lowest-cost plans offered in each market in which such a plan participates. 

Most of these urban markets had six or more insurers. The competition has generally resulted in lower premiums, the analysis found.

Increased participation by large commercial insurers appears to have a significant effect on benchmark premiums and growth rates. Often, large commercial insurers had participated in the marketplace earlier but with high premiums; these insurers left but are now reentering with more competitive premiums and, likely, narrower networks.

RWJF also found that rural areas and smaller cities typically have two or three insurers, and many of these markets seem to show genuine competition despite fewer insurers. Some of these markets, however, have a dominant Blue Cross Blue Shield plan, little insurer competition, and high premiums. Insurers in many rural areas and smaller cities, including Blue Cross Blue Shield, face difficulty in negotiating payment rates with providers, which results in higher premiums, according to the analysis.

THE LARGER TREND

The report concluded that competition in most markets has kept premiums low and annual increases modest, resulting in lower costs for both households and the federal government. This is particularly true in urban markets with several competitors, including Medicaid and provider-sponsored plans. 

Competition has been less robust in small cities and rural areas. Premiums have been kept low partly because insurers have developed narrow network plans with providers willing to accept lower payment rates. Narrow networks are not necessarily a problem. But the looming issue is whether the resulting low premiums are also associated with provider networks that are in some ways inadequate, according to the report.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com