The Colorado Division of Insurance released 2015 health insurance rates this morning, and things are looking pretty good. The average increase across all carriers in the individual market is less than one percent: 0.71% to be exact. We’ve been in the health insurance industry since 2002, and we’ve certainly never seen an average even close to that low.
Lower rates in the mountains
Our clients who live in the central mountains will be happy to know that the average rates in that area are dropping by an average of at least 5%. There was a lot of controversy over how the mountain region was divided into rating areas, and the way it shook out in 2014 meant that Summit, Garfield, Eagle and Pitkin counties had the highest average health insurance premiums in the United States. That meant people with incomes under 400% of poverty level got huge subsidies in those counties, but people with incomes just over the subsidy threshold were paying very high premiums.
A few months ago, HHS approved a plan to combine rating areas in Colorado. What used to be areas 8 and 9 are now combined into area 8 (East area), and what used to be areas 10 and 11 are now combined into area 9 (West area, not including Mesa County). Premiums in area 8 are decreasing by an average of 5.01%, and premiums in area 9 are decreasing by an average of 7.44%. Anthem Blue Cross Blue Shield announced earlier this month that they are expanding into the mountain region for 2015, and Kaiser Permanente – currently only available along the Front Range – will be offering plans in the mountains in 2016. These changes should work in conjunction with the new rating areas to keep premiums in check in the mountain areas for the next few years.
Colorado continues to have a robust individual market, on and off-exchange
Our focus is individual health insurance, so those are the rates I’ve been looking at this morning. As is the case in 2014, Cigna and Denver Health Medical Plan are only available in the Denver area (rating area 3). All of the Colorado individual carriers are offering at least some plans in the Denver area, with both EPO (exclusive provider network) and HMO options available for some carriers. Most of the other eight rating areas all include plans from at least six carriers, although area 5 (Grand Junction, Mesa County) has the most limited options with only three or four carriers offering plans in the exchange for each metal level.
There are more plans available off-exchange than in the exchange. There are 176 plans that have been approved for sale through Connect for Health Colorado, and 296 that are for sale outside the exchange. National Foundation Life and Freedom Life (both from US HEALTH Group) will be offering new individual policies in 2015, off-exchange only. On the exchange, all of the individual carriers that participated in 2014 are returning next year, and there are no new carriers (SeeChange Health Insurance just had its license suspended by the Colorado Division of Insurance earlier this month following reports of financial insolvency. They were in the exchange this year and will obviously not be participating next year, but they were only in the small group market, so this change does not impact the individual market in Colorado).
Subsidies will result in net premiums lower than those released by the DOI
Keep in mind though that premium subsidies are only available for plans purchased through the exchange. And the rates that the DOI just released are base rates, before subsidies are applied. If you qualify for subsidies, your net premium could be significantly lower. It’s important to note that the subsidy you get next year will not necessarily be the same as the one you got this year. Subsidies are tied to the price of the second lowest-cost silver plan (ie, the “benchmark” plan in each area). The after-subsidy cost of that plan is capped at a certain percentage of your household income, ranging from 3% of income for people with incomes from 133% to 150% of poverty, up to 9.5% of income for people with incomes between 300% and 400% of poverty (people with incomes above 400% of poverty do not qualify for subsidies and must pay the full cost of coverage regardless of what percentage of their income that requires).
So the subsidy is a function of your income and the base price of the benchmark plan in your area. You can then take that subsidy and apply it to any “metal” plan in the exchange. If you buy a bronze plan, your after-subsidy cost will be even less than the percentages designated in the ACA, but if you buy a gold plan, you’ll pay more. None of that is changing, but the benchmark plans can change both in terms of what carrier is providing the coverage and how much it costs. And in a recent study released by the Kaiser Family Foundation, Denver stood out as having the most significant premium decrease for benchmark plans (more than 15%). So it’s important to recalculate your subsidy and re-evaluate your health insurance options during the upcoming open enrollment that runs from November 15 to February 15. Please let us know if you need help with this; there is never any cost for our services.
2015 rates are still an educated guess
Carriers had to submit their 2015 rates to the Colorado Division of Insurance by early June, and the state has been reviewing them ever since. Everything about the individual health insurance market changed in January when all policies became guaranteed issue and pre-existing conditions were covered for the first time with no exclusions or rate-ups. To off-set the added claims expenses, we now have the shared responsibility provision (individual mandate) that requires almost everyone to have health insurance. But actuaries were putting together the 2015 rates in the spring, with very minimal actual claims data upon which to base their numbers (since the new policies had only begun to take effect in January). So although we’re thrilled with the less than one percent average rate increase in the Colorado individual market for 2015, we’re already curious to see what 2016 rates will look like when they’re released a year from now. By the time actuaries are setting 2016 rates next spring, they will have more than a year of claims data and the rates will no longer just be educated guesses. Hopefully the increased competition and the individual mandate will be successful in holding down prices again next year.
people with incomes just over the subsidy threshold were paying very high premiums.
