Crazy Health Premium Ride Ahead For Mass. Small Businesses

hounddiggity/flickr

hounddiggity/flickr

Small business owners and residents who buy health insurance on your own: my sympathies.

The next time you renew health insurance may be an even crazier experience than usual. The Affordable Care Act is changing the factors insurers consider when setting your rates. And, some insurers will benefit more than others, based on a pretty complicated “risk adjustment” for their members. The result is a 30 percent spread between increases and decreases, as of Jan. 1, 2014. It’s the biggest difference in rates that anyone I spoke to has seen in Massachusetts.

Here are the rates for the beginning of the year, and for the next quarter, which the state put out:

Rates in August 2013 with the Massachusetts Office of Consumer Affairs and Business Regulation


Here’s some reaction:

Health Care for All’s research director, Brian Rosman, said the rates are “encouraging and reflect both the state’s efforts to control medical costs and the impact of the ACA on the market. Anytime you see an insurer reducing rates by 25 percent, that’s good news.”

Lora Pellegrini, president of the Massachusetts Association of Health Plans, said “folks need to do the comparison shopping. People could see wide swings in their premiums, so they should take time during open enrollment to consider all their options.”

Jon Kingsdale, managing director for Wakely Consulting Group, had predicted a higher average base rate. He says the numbers in the chart above show that insurers are being very competitive to gain new members next year. Kingsdale agrees that shopping for the best deal may be more important now, but he has one caution:

Everyone is guessing what 2014/15 will look like under this new arrangement, so the rate change from ’13 to ’14 for any carrier may fluctuate yet again in 2015 and 2016. It may not be the right time to change carriers for a 2, 3 or 4 percent advantage in premiums because you might have to just change again in 2015.

Jon Hurst, president of the Retailers Association of Massachusetts, emailed these observations:

The lower trend that we have seen the last two years continues, and much of that has to do with lower utilization rates by consumers, as well as lower increases for provider reimbursements. Yet many of these increases are still greater than our state target under payment reform. So the real test will be what actual small businesses and the employees see at renewal time. We are certainly not done with any and all efforts to secure a MA waiver on the rating factors since we are 7 years ahead of the rest of the nation, and our state reforms face real injury due to the loss of the market gains we have recently seen.

Meanwhile, over at the Pioneer Institute, Joshua Archambault has a post about the rate filings. He writes that the filings don’t really tell us much about the ACA’s impact in Massachusetts.

We’d love hear your reactions in the comments.

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  • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

    I always forget to mention the obvious. All of this is nice but it doesn’t mean you are going to see just a few percent increase in your premiums next year no matter which insurer you choose. Unless you have had the outstanding health-care outcome of not growing a year older during 2013, your premium is going to go up the usual 8 to 12 percent.

  • http://byrondennis.typepad.com/theabcsofmedicare/ Dennis Byron

    People get paid a lot of money to figure these things out and I’m not one of them.

    But putting an old statistician’s eye to all the numbers discussed here, in other blogs and in earlier blogs, the earlier estimates of bigger average-growth-rate increases than this seems to come primarily from increased “morbidity” (terrible word) of adding former RomneyCare people with incomes above 133% of FPL into the merged market (while putting those RomneyCare subscribers between 100%-133%) into Medicaid. Some one claims (a report from Mass Association of Insurance Plans or some such thing) that poorer people are bigger risks so perhaps Medicaid is picking up more of the risk reducing average insurance growth rates for the merged market pool.

    There is also a key date in your chart — March 31 — the date by which all Comm Choice people have to buy one of these new plans. Most of these rates only apply through March 31.

    But one would think the Waverly Group would have figured all this out.

    So putting an old marketing guy’s hat on (not healthcare marketing, IT marketing) I think it’s simply Blue Cross trying to buy market share. And/or perhaps Blue Cross’ rates have been historically too high (Mr. Levy?)? Remember these are average quarterly growth rates; these numbers do not mean Blue Cross is the best deal in the market.

    It seems real strange that the market leader is going one way while its next four largest competitors (combining the two Tufts, the two Harvards, and the two Fallons) are in fact coming right in at the numbers Waverly projected.