Despite the noise around the higher cost of some health plans on the exchanges, rate increases generally have more to do with the trend of steadily higher medical costs than with provisions of the Affordable Care Act.
Rising medical costs were the primary driver of recent rate increases by insurers and accounted for three-quarters or more of the larger premium hikes requested between July 2012 and June 2013, according to a recent Commonwealth Fund study.
The analysis took a national look at the explanations insurers filed with federal and state authorities to justify rate increases of 10 percent or more. The health reform law has encouraged more transparency about rate increases.
Currently, insurers are only required to submit rate increase explanations for non-grandfathered plans--those plans that became available after the enactment of the health reform law.
The researchers reviewed 311 filings for rate increases of 10 percent or more by insurers for non-grandfathered plans covering 150 or more people in the individual and small-group markets for the study.
The review found that only about half the filings attributed any portion of rate increases to provisions of the health reform law that had gone into effect by 2013. Overall, those effects represented only a small part of insurers' increases.
"We found that medical costs were the main drivers of these larger increases, based both on increasing use of medical services and higher unit prices," said researchers Michael McCue, a Virginia Commonwealth University health administration professor, and Mark Hall, a Wake Forest University law and public health professor, in the study. But price was a greater factor than utilization of medical care.
For the year beginning July 2012, the average annual increase in the individual market requested by insurers in the sample was $648, 19 percent more than the prior-year premiums. For the small group market, the rate rise averaged $729 annually for the sample, a 15 percent average increase.
The ACA-related factor mentioned most often, but only in a third of the rate filings in the study, was the requirement to cover women's preventive and contraceptive services without cost sharing by the patient.
But the insurers who cited this and other ACA-related costs attributed only about 1 percentage point of their rate increases to the health reform law.
About one half of the rate filings that took effect in 2013 also cited new taxes and fees associated with the law starting in 2014 as contributing to costs, amounting to 3 percent of premiums when calculating a full year's worth of these fees. And a few insurers said that ACA provisions that took effect previously, such as increasing caps on lifetime and annual limits, added to higher costs.
Non-grandfathered insurance policies in the individual and small-group markets that take effect or renew Jan. 1 will be subject to guaranteed issue, community rating and essential health benefits under the ACA. Insurers will also have to report all non-grandfathered rate increases in those markets.
"These rate filings will be a valuable source of information about the extent to which these new market rules affect insurance rates," the researchers said in the study.