Washington State Rate Analysis: Carriers with Low 2014 Market Share Hold Down Premiums in 2015

A new analysis from Avalere Health finds that proposed rate increases for 2015 exchange plans in Washington state were lowest among carriers with the smallest share of the 2014 market.

Molina, which captured only 1 percent of 2014 exchange enrollment in the state, proposed a nearly 7 percent average rate decrease for 2015. In addition, other low enrollment carriers, Kaiser Permanente and BridgeSpan Health, each proposed average increases of less than 2 percent. Washington state is the first to release both 2015 rate filings and carrier-specific enrollment offering early insights into how enrollment drives the pricing strategy of plans in the exchange market.

“Consumers enrolling through the exchange are extremely price sensitive and tend to focus primarily on premiums,” said Dan Mendelson, CEO at Avalere Health. “In this vibrant market, plans that gained a minimal share in 2014 will naturally want to price their products more competitively in 2015.”

Proposed rate increases were mixed among plans with high 2014 enrollment. Premera Blue Cross, which grabbed 46 percent of the market in 2014, proposed an 8 percent increase for 2015. Meanwhile, Centene (Coordinated Care) and Group Health Cooperative, which gained 17 percent and 16 percent of the market, respectively, requested the largest average rate increases—over 11 percent.

“While it is hard to pinpoint exactly what is driving rate increases for any given carrier, 2015 rates may reflect a plan’s experience with the initial membership, overall medical cost trends, or the plans’ relative comfort level with their current competitive positioning,” said Matt Eyles, executive vice president at Avalere.

Proposed rates for 2015 may also offer insight into potential enrollment for the upcoming plan year, particularly for new enrollees. In 2014, enrollment was concentrated among the lower-priced issuers. Looking ahead to 2015, Centene (Coordinated Care) has proposed both the lowest- and second-lowest-cost silver plans in four of the state’s five regions and maintains the lowest rank in terms of lowest average silver plan premium. BridgeSpan Health Company and Molina improved their silver plan premium positioning, while Moda Health Plan is the only new market entrant to reach the top 5 in terms of silver premium competitiveness. With more than half (65 percent) of exchange enrollees choosing silver plans nationwide in 2014, competitive silver products are likely to remain central to the 2015 market.

“The critical question for 2015 is how many exchange enrollees will keep their current plan versus how many will shop for a new plan to find lower premiums,” said Elizabeth Carpenter, director at Avalere. “Plans bid competitively in 2014 to win early enrollees, but they may lose those members if other insurers put forth lower cost options.”

Avalere will continue to analyze 2015 rates as they are released.

View the full Avalere press release attached.

Methodology

Analysis includes 2014 premiums and proposed 2015 premiums in Washington State.  Market share for 2014 was calculated based on enrollment data as of March 31, 2014, released by the “Washington Health Benefit Exchange, Health Coverage Enrollment Report: October 1, 2013- March 31, 2014.”

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