Some Insurance Analysts Expect Lower Premium Increases in 2015

Some health insurance analysts and industry statisticians are predicting that premium rates will increase by an average of just 7% in 2015, which is well below the double-digit increases that some observers have anticipated in recent months, USA Today reports.

Dave Axene -- a fellow with the Society of Actuaries, which has been working with insurers to analyze data trends about enrollees in the Affordable Care Act's exchanges -- said, "The [double-digit rate] increases we've been hearing are probably exaggerated."

He acknowledged that there likely would be wide variations in premium rate increases across states but that the rates would increase by only between 6% and 8.5%, compared with increases of between 7% and 10% prior to the ACA's implementation.

In addition, Axene said that based off of analyses of early exchange enrollees, such individuals tend to be people with "higher morbidity." Specifically, about 6% to 8% of early enrollees had higher-than-average health care needs, USA Today reports. However, this trend was expected and likely will not influence the 2015 premium costs, according to Axene.

Axene noted that premiums still could increase in coming years, particularly in 2017, when "the risk corridors go away, which provide financial protection if [insurers] are bad at estimating numbers." He said insurers might increase premium costs in 2016 to spread out the overall increase over a two-year period.

Axene also noted that growth in health care costs has slowed over time, in part because of improvements in the health care system, which he said could continue to curb costs in the future. He said, "If the cost curve is really bending as a result of what we're doing, that should favorably affect rates." He added that the growth rate could continue to be kept down if consumers continue to spend more on prescription drugs and less on follow-up visits and hospitalizations.

Industry Reports Support Expert's Predictions

According to USA Today, Axene's predictions about decelerations in premiums and health care costs have been substantiated by several recent industry reports.

One report from the IMS Institute for Healthcare Informatics found that while health care costs have rebounded alongside the economic recovery, overall health care costs have remained lower than usual.

Meanwhile, the Congressional Budget Office this week revised its initial analysis on premiums, lowering its projections by about 15%, in part because of "lower projected health care costs for the federal government and the private health sector" (Kennedy, USA Today, 4/16).