Individual premium increases point to worse than expected statewide risk pool profiles, medical utilization
The chart below appeared in a Wall Street Journal article updating plan year 2016 individual health insurance premium rate filings across several states. What’s noteworthy is the upper half of the states listed indicate rate increases in excess of the seven percent “trend” of recent years. While the Patient Protection and Affordable Care Act restored the risk spreading function of insurance to the individual health insurance market by mandating statewide risk pools for plans established after the law was enacted in March 2010, the article suggests the risk profile of some statewide pools is poorer and the rate of medical services utilization higher than expected. Also consider the law’s premium stabilization programs (reinsurance, risk corridors and risk adjustment). They are designed to moderate loss experience among health plan issuers so that any one issuer won’t experience adverse selection requiring large rate increases of the magnitude shown here.
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