Benefit advisers may be in high demand this fall as the first round of health plan rate filings for 2015 suggest many individuals who purchased coverage through the public exchanges may need to do some more shopping when it’s time to re-enroll.
That’s because the dominant carriers appear to have under-priced their plans for 2014 as an effort to gain market share and are planning to make up for lost ground next year with increased premiums. Some of the smallest carriers, however, plan to cut their rates in a bid to increase market share, a Wall Street Journal poll found.
Confused consumers will be faced with a choice between sticking with their current plan and enduring the rate hikes or choosing a new plan.
See related: Advisers ‘key’ in next ACA enrollment period
“Advisers need to be preparing clients for a rate increase in January,” says Tanya Boyd, a benefit adviser and president of the Sunnyvale, Texas-based Tanya Boyd and Associates. “We need to ease their minds with the fact the increase should be minimal and guarantee them we will shop around and make sure they still have the best plan and price available.”
The Wall Street Journal review of rate filings in ten states whose rate filing deadline has passed found that with only one exception, the plans with the most enrollees today in each state are proposing rate increases between 8.5% and 22.8%. The average is around 10%.
Boyd says the increases “will probably come as a surprise and disappointment” to those who obtained health insurance coverage for the first time in 2014, but for those enrollees who have had coverage previously, they are accustomed to some type of increase.
Market analysts interviewed by the Journal believe the heavy hitters are confident they have amassed a large enough market share to muscle through significant rate hikes.
At the same time, with many people having waited until March to sign up for health coverage, carriers haven’t been able to accumulate sufficient claims experience to get a firm grip on what their costs are likely to be next year.
Large premium increases, if permitted by state regulators and grudgingly accepted by consumers, will give them more of a margin of error.
Carriers also must factor in the underlying inflation rate for medical services, estimated at 5.4% by SSR Health LLC, an investment research company. Drug costs are believed to be rising at a more rapid rate. ACA benefit mandates and taxes also have, to some degree, added to a carrier’s cost base.
Whether consumers will switch carriers en masse next year to find better rates will depend not only on price differences, but how cumbersome the process will be. The Obama administration has not yet announced what procedural changes will be required.
“Consumers also need to understand the penalty for not having insurance will increase for 2015,” Boyd adds.
Stolz is a freelance writer based in Rockville, Md.
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