The Affordable Care Act's rate review is turning out well for consumers, according to the federal government, and although insurers may not be stoked about the new administrative work, it doesn't seem to be scaring them away.
Three years into a federal rate review for individual markets in 40 states and small group markets in 37 states, would-be premium increases have been pared back, while participation in the public exchanges is set to grow for the second open enrollment period by about 25 percent -- with 80 new health plans across state and federal exchanges.
In the 2013 plan year, the federal rate review conducted for 40 states' individual markets and 37 states' small group markets saved consumers a collective $1 billion in premium increases, according to the Department of Health and Human Services' Assistant Secretary for Planning and Evaluation.
In the individual markets, premiums were reduced by about $290 million, and in the small group markets, about $703 million. The average increase ended up being around 10 percent in the individual markets and 7 percent in the small group markets.
While the average premium increased more in 2013 than in 2011 or 2012, "it was still less than typical growth prior to the Affordable Care Act," officials at the HHS Office for Planning and Evaluation wrote.
The ACA's rate review authorized federal regulation of individual and small group markets in states without oversight and from 2008 to 2010 annual premium increases in the individual and small group markets were in the range of 10 percent, according to HHS. In 2010, for instance, a quarter of all individual market issuers increased premiums by 15 percent or more.
Last year, 25 percent of individual plan rate filings sought increases of more than 10 percent, from plans with about 2.8 million of the market's covered lives, according to HHS. Almost all of them, 23 percent, were approved with increases of 10 percent or more -- though not necessarily in the full amount. Plans covering 1.5 million lives had rate increases reduced or denied, officials said.
In the small group market last year, 20 percent of rate filings sought increases of 10 percent or more, and 18 percent ended up implementing increases of at least 10 percent, while 20 percent of total covered lives in the 37 states' small group markets had increases pared back.
For the current 2014 plan year and hereafter, individual and small group insurers have to submit data on all plans and all their risk pools in a single rate filing with state insurance regulators and the Centers for Medicare & Medicaid Services -- to give a fuller picture of actuarial justifications for rate changes.
"This data will substantially improve the ability to review rate impacts on the market as a whole, compare rates across issuers, and monitor changes over time," HHS officials wrote. "Using both historic and new filing and review methods, HHS will continue to monitor the long-term trend of requested and implemented rate increases in the health insurance market."
Between pared-back increases in the rate review and rebates from the medical cost ratio rules mandating proportional spending of premiums on health services, consumers saved $1.2 billion last year and $1.6 billion in 2012, according to HHS.