2015 OEP: Emerging trends in the individual exchanges
The 2015 open enrollment period (OEP) begins in about seven weeks. To develop a preliminary understanding of how it is likely to differ from last year’s, we analyzed all available data from the state exchanges as of September 15, 2014. We began by collecting the carrier participation data released by 40 states and the District of Columbia; collectively, these localities contain nearly 80 percent of the population eligible for qualified health plans (QHP) in the United States. We then examined data from the 19 localities (18 states and D.C.) that released complete rate filings, which collectively contain 44 percent of the QHP-eligible population. (To simplify the discussion in this Intelligence Brief, we refer to the first group as “41 states” and the second group as “19 states.”) For comparison with 2014 carriers and products, we used the comprehensive exchange offering database we developed during that OEP. Because detailed information about 2015 rate filings is currently available from only 19 states, many of our analyses focused on silver plans, the products purchased most often during the 2014 OEP.1
We elicited four key observations from our analyses:
- Competition and choice are increasing. In the 41 states releasing exchange participation carrier data, the number of health insurers increased by 26 percent between 2014 and 2015.2 In the 19 states with complete filings, the number of products grew 66 percent, with most in the silver tier.
- Gross premiums for most 2014 plans are likely to increase. In the 19 states, proposed gross premiums are increasing for 65 percent of all exchange renewal products (plans offered in 2014 that were re-filed for 2015).3 In 2015, therefore, enrollees could see a median increase of 4 percent when they receive their renewal notifications.4 However, the actual increase they pay could be less than half that amount, given that many people will have the option of switching to a lower-price plan.
- Price leadership volatility is high; in many rating areas, proposed 2015 premiums are lower than 2014 premiums. Because price leadership is likely to turn over in 59 percent of the rating areas, over half of QHP-eligible individuals could have a new lowest-price carrier (either a higher-priced 2014 competitor that lowered prices substantially or an aggressively priced new entrant). Two-thirds of the rating areas with a less expensive lowest-price silver plan in 2015 have a new price leader.
- The changes in net premiums for the subsidy-eligible are likely to vary significantly. Net premiums (the cost of products after subsidies) for the lowest-price silver plans are likely to increase for 70 percent of subsidy-eligible individuals in the 19 states and decrease for 29 percent of that population (1 percent will see no change). The extent of the potential increases and decreases varies by market and income; individuals at the high end of subsidy eligibility (200 to 400 percent FPL5) are likely to see the highest increases.
A caveat: The rates released by the 19 states are the most recent information that is publicly available; however, they should be considered preliminary until exchanges go live on November 15th . For 7 of the 19 states (Colorado, Connecticut, District of Columbia, Indiana, Maryland, Oregon, Washington), the rates for 2015 have been approved but could still be modified before OEP. For the remaining 12 states, approved rates are not yet available. Furthermore, the rates to be released by the remaining 32 states could alter some of the trends just described. Once data from all states are available (after the 2015 OEP begins), we plan to publish a more detailed Intelligence Brief that will update our initial findings and contain more information about the catastrophic, bronze, gold, and platinum tiers. In the interim, we will regularly update our online, real-time 2015 rate filing tracker.
- Complete details about the specific states analyzed and our methodology can be found in the appendix.
- Our calculations are based on the number of carriers that offer plans in each state. For example, a national carrier that offered plans in 12 states in 2014 would be counted as 12 “unique payors” in that year. However, a carrier that offered 2014 exchange plans in 4 rating areas within 1 state is counted as a single entrant in that state.
- In the 19 states, 81 percent of all 2014 products were re-filed.
- Because of limitation in the available data, our calculations did not account for the fact that enrollees who aged a year between 2014 and 2015 will get a slightly different premium as they move up on the age curve. By analyzing the standard CMS age curve that applies to 45 of the 51 states, however, we were able to estimate that the average rate increase incurred for individuals ages 21 through 63 is 2.6% per year.
- Based on 2014 federal poverty level (FPL) guidelines; for a household of one, household income at 200 percent of FPL is $23K and at 400 percent of FPL is $47K.