2015 ACA Premium Cost Drivers

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August 8th, 2014

Premium Cost DriversWith 2015 rates being announced throughout many US states, health insurance premiums for plans under the health law are expected to rise.

Florida was among the states seeing a sharp average increase – Florida health plans will see a rise in premiums of 13.2%.

Florida Premium Rate Changes

  • 14 companies filed to offer plans through the health care exchange next year. Three of them will be new to the state.
  • Eight of the returning 11 plans filed average rate increases ranging from 11% to 23%. The remaining 3 saw rate decreases of up to 12 percent.
  • Florida Blue, the largest state insurer, will see its premiums rise by an average of 17.6%.

Scenario 1: Family of four in Alachua Country with a household income of $51,000 a year would pay a $432 monthly premium after subsidies for a silver level plan in 2015, compared to $342 in 2014.

Scenario 2: A single 28 year old with an income of $27,000, also in Alachua County, would pay $209 after subsidies in 2015, compared to $183 in 2014 for a silver level plan.

Key Cost Drivers for 2015 Premiums

While the rates being filed are not guaranteed to reflect premiums at the time of enrollment – open enrollment for 2015 begins Nov. 15th – they do reflect the impact certain cost-drivers are having under the Affordable Care Act.

The American Academy of Actuaries published a report highlighting the key drivers of 2015 health insurance premium changes, shedding light on what consumers can expect to be paying and why.

Actuaries set premium prices based on projected medical claims and administrative costs for a pool of individuals or groups. From studying 2014 premiums and the projected premium rates filed for 2015, the AAA has pinpointed the following major premium cost drivers:

  1. Composition of the risk pool and how it compares to what was projected.
  2. Reduction of reinsurance program funds.
  3. Underlying growth in health care costs.
  4. Changes in provider networks.
  5. Changes in provider reimbursement structures.
  6. Benefit package changes.
  7. Risk margin changes.
  8. Market competition.
  9. Increase in health insurer fee.
  10. Changes in geographic regions.

Many of these cost drivers rely heavily on key ACA provisions that prompted insurers to raise premiums and recoup as much of their mandated expenses and fees as possible. To read more about how actuaries and insurers determine premium prices and how key cost-drivers will impact 2015 rates, download the AAA’s Issue Brief – Drivers of 2015 Health Insurance Premium Changes here.