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Small Business Employee Benefits and HR Blog

Survey Shows a Decrease in 2015 Marketplace Premiums

With open enrollment fast-approaching, there has been a lot of hype surrounding the projected Marketplace rate increases for 2015. While an initial analysis by Pricewaterhouse Cooper reports an overall projected rate increase of 8.2 percent, a new survey from the Kaiser Family Foundation shows that Marketplace rates may slightly decrease this year.

An Analysis of 2015 Premium Changes in the Marketplace

An initial analysis of 2015 Marketplace rate filings reported a projected increase of 8.2 percent, leaving the average monthly premium at around $385. According to the KFF’s analysis, the average Marketplace premium will be decreasing by an average of -0.8 percent.Silver_Premium_Percent_ChangeChart: Kaiser Family Foundation

The average monthly premium, however, does not include the premium tax credits which are available to the majority of individuals and families who purchase coverage on the public Health Insurance Marketplaces.

Rating areas have a lot to do with premium costs. Since there are over 500 rating areas under the Affordable Care Act, for the purpose of this study, the KFF examined premium changes in the rating area that includes a major city in each of the 15 states examined.

The analysis looked at the change in the premium for the lowest-cost options available in the states they examined. For each area, the premium changes for the lowest-cost bronze plan and the two lowest-cost silver plans were examined, as these were the most commonly selected plans among Marketplace enrollees.silver_plans_for_non_smokerChart: Kaiser Family Foundation

As seen in the chart above, premium changes for 2014 will vary widely across areas and across insurers. The premium changes will vary based upon the make-up of each risk pool and how accurately insurers projected the mix of healthy and sick people in their risk pools.

The KFF also points out that, states with high first-year enrollment rates should have more balanced risk pools, while “Conversely, states that permitted non-compliant plans to continue under a federal transition policy may have less balanced risk pools since healthier-than-average individuals likely stayed in those non-compliant plans.”

As the Marketplace enters the second year of operation, more major health insurance carriers are entering the Marketplaces or expanding their presence in the Marketplaces.

For example, Assurant Health will enter the public Marketplaces in 16 states and United Healthcare is expanding their Marketplace presence from five states in 2014 to as many as 24 states in 2015. Aetna, Humana, and Cigna are also expanding Marketplace offerings in 2015.

The KFF analysis points out the importance of shopping around for Marketplace coverage during open enrollment 2015, as they could find a significantly lower premium. As the analysis points out, “How willing people are to switch plans will not only affect what they pay next year, but how strong competitive forces are in the future and how much pressure insurers feel to keep premium increases modest.”

For consumers, this news means more individual health plans to choose from and more competition in many of the state Marketplaces. This increased competition among carriers will help to keep rates down in 2015.

What do you think about the projected Marketplace rates for 2015?

Read the full survey at Kaiser Family Foundation