Exchanges year 2: New findings and ongoing trends
The open enrollment period (OEP) for year 2 of the individual exchanges is officially under way, having begun on November 15th. To understand how the products being offered this year differ from those offered during the 2014 OEP, the McKinsey Center for U.S. Health System Reform expanded its database to include all of the 335 carriers participating on the 2015 exchanges and all of the products they are offering there. This year, we were able to obtain data at a deeper level than we did last year (i.e., we were able to obtain 2014 and 2015 data for each county, not just each rating area). Thus, our database contains information on more than 223,000 ACA-compliant on-exchange products from both years, including premiums, benefit design, and network design. As a result, we were able to compare year-over-year carrier, product, and premium changes across the market as a whole. In addition, for each product offered in 2014 that was re-filed in 2015, we linked the data from both years so that we could understand the specific changes that 2014 exchange enrollees are seeing during the 2015 OEP.
We elicited five key observations from our analyses:
- Competition and choice are increasing nationwide. In most counties, consumers shopping for coverage on the 2015 public exchanges have more carriers and more products from which to choose. Nationwide, the number of carriers participating on the exchanges has increased 19 percent since the 2014 OEP, and the number of products has increased 27 percent.
- Gross premium prices are rising, especially for PPO and broad-network products. Between the 2014 and 2015 OEPs, gross premiums of the lowest-price exchange products rose by a median of 6 percent across metal tiers.3 Among the lowest-price 2014 exchange products re-filed for 2015, the median gross premium increase is 10 percent. Premiums for re-filed products built on health maintenance organizations (HMOs), narrowed networks, or both increased much less than did the premiums for products based on preferred provider organizations (PPOs) or broad networks.
- Switching products would minimize or eliminate premium increases in many cases, but would not always lower overall costs. We estimate close to three-quarters of 2014 exchange enrollees have access this year to a product that is within the same metal tier as the product they bought last year but priced below the 2015 premium of last year’s plan. Often, however, the lower-premium products have higher deductibles.4
- Net premiums for subsidy-eligible consumers have often risen. Net premiums for the lowest-price silver products have increased for nearly three-quarters of those eligible for subsidies,5 but in most cases the increases are less than 10 percent.
- Recent and new entrants are often price leaders. Just over half of new price leaders are either recent or new entrants (i.e., carriers that entered the individual exchange market in one or more states last year or this year). In many counties, there is a significant change in competitive price positions.