Group Health Insurance Outlook 2015
Group Health Insurance Outlook 2015 for Groups of 2 – 50
As we begin the second half of 2014, we are starting to have a better idea of where premium rates will be in 2015, one full year after several major components of the Affordable Care Act were implemented. In New York, the most significant components include:
– All plans requiring pediatric dental and vision
– All plans requiring prescription drug coverage
– All plans having maximum out of pocket limits
– The elimination of pre-existing condition exclusions
– A new marketplace for individuals
– Mom & Pop elimination (Husband and wife businesses no longer considered small groups)
While premium increases are a given, can we predict exactly how much rates will rise? So far we have seen large rate increase requests from several carriers. Aetna, who opted not to participate in the Obamacare exchanges in an effort to avoid substantial investment costs, started out the year with extremely competitive rates in the small and mid-size markets. This has allowed them to take a big bite out of Oxford’s historically substantial market share. Health Republic, a new health insurance carrier in NY, also came out with extremely competitive rates and a decent provider network (with the exclusion of North Shore LIJ).
However, a notice was just sent out from Aetna to health insurance brokers last week indicating that they have filed their 2015 rates with the state and are requesting a 26% increase (well beyond the normal 12% healthcare trend). Of course, the final rates will depend on whether or not the state allows the increase.
Since 2011, New York State has had the authority to approve or deny health insurance rate increases. Their decisions are based on a number of factors including:
– Sufficient data and documentation showing the proposed increases are reasonable
– The overall rising cost of health care services
– Reserve needs
– Administrative costs related to programs that improve health care quality
– Applicable taxes and licensing or regulatory fees
– Medical loss ratio; and
– The issuer’s capital and surplus
Over the last couple of years, we have seen rate increase requests approved, denied, and adjusted. Based on 2014 pricing, we imagine that larger than normal increases will occur in the 2 – 50 market at Aetna and Health Republic. However, we expect Oxford Health Plans, North Shore LII CareConnect, and Emblem Health Plans to be well poised for 2015 based on their current rates and plan offerings.