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Florida: 2015 premium rate requests: (Questionably) weighted avg. 13.2% increase (UPDATED)
Most of the states which have released their proposed (or final) 2015 rates have looked pretty good so far, with Rhode Island (4.3%), Connecticut (appx. 4.5%), California (4.2%) and Oregon (6.8%) only going up between 4-7% on weighted average, and Mississippi actually seeing an overall weighted average decrease of around 2%.
Floridians who buy health insurance on the individual market for next year will face an average increase of 13.2 percent in their monthly premiums, according to rate proposals unveiled Monday by the state’s Office of Insurance Regulation.
Of the 11 returning plans, eight filed average rate increases ranging from 11 to 23 percent, and three filed rate decreases ranging from 5 to 12 percent, the state’s insurance regulator reported.
HOWEVER, there's some question as to how they came up with this increase, which claims to be "weighted" based on projected enrollments for 2015, not actual current enrollments:
(3) Weighted averages give more weight to companies with larger membership. The projected membership is based on proprietary company projections.
Yes, it's true that "more weight" should be given to companies with larger memberships, but the only hard numbers we have are existing enrollments, not "proprietary projections". This point is not lost on ACA supporters:
Supporters of the health law, however, were quick to discredit the state’s methodology for calculating the impact to consumers.
Florida CHAIN, a health consumer advocacy organization, accused the state insurance regulator of engaging in “a frenzied rush to mislead’’ consumers by failing to weight averages based on who is enrolling in which plans, said Greg Mellowe, policy director.
“OIR’s method of averaging is all about skewing the data to the extreme, and their report should be disregarded,” he said.
Without knowing the current marketshare breakdown of the 11 companies currently selling on the exchange (the only hard number I've found so far is Florida Blue with 34%), it's difficult to know the current weighted average...and again, even with that, it's impossible to know what the true impact will be; if, say, 100,000 Floridians decide to switch from Florida Blue (18% increase) to Molina Healthcare (12% decrease), that could mean a much lower increase in the actual premium rates people end up paying.
Plus, of course, there's the fact that Florida was already dealing with 11%+ annual rate increases even before the ACA, so it's not like further increases are exactly unprecedented.
All that said, however, Florida isn't looking great at the moment.
UPDATE x2: Thanks to Caitlin Sweany of PricewaterhouseCoopers for explaining an interesting discrepancy I noted in at least one state (my own state of Michigan). This is another example of how difficult it is to nail down the actual impact of these rate changes (and remember, in many cases these are still just requests, not approved rates, subject to change). Case in point:
According to the Detroit Free Press's original story on the subject, Michigan's "average" premium rates are only going up 0.8%. Hooray!!
However, ACA supporter though I may be, I had to pour some cold water on this claim by pointing out that when you do a weighted average (ie, taking into account the fact that BCBSM and Blue Care Network combined make up 74% of the total enrollments), it's actually more like a 9.4% increase. Not awful, but a lot worse than the Free Press made it sound like.
However, Ms. Sweany explained that when PwC does their analysis, they take it one step further, taking into account the different metal level plans...and put the "true" average increase pretty much in the middle, at around 4.6%.
You see, just as not every insurance company will have the same total enrollment, the same is true with the different plans within each company.
Let's say that a given company had plans priced at $400 (Platinum), $300 (Gold), $200 (Silver) and $100 (Bronze), averaging $250.
They ask for a 15% increase on Platinum ($460), 10% increase on Gold ($360), no change to Silver ($200) and a 10% decrease for Bronze ($90).
Add these up and you get an unweighted average of $277.50, or an 11% increase.
However, again, just like with weighting the companies, you have to account for how many people enroll in each plan. If 90% of the customers are enrolled in the Silver plan, then the overall rate change will be almost zilch in this scenario...assuming that most of them stick with the same plan, that is. It's even conceivable that there will be an overall drop in the 2015 rates in this scenario, if enough people stick with the Silver and Bronze plans.