Jakob Rodgers, The Gazette
Colorado’s health insurance market appears to be stabilizing after years of steep, double-digit rate increases and threats of insurers leaving the state.
Health insurance rates for Coloradans buying their plans on the state’s individual market will rise an average of 5.6 percent in 2019, the Colorado Division of Insurance announced Thursday. Also, the same seven insurers will remain in Colorado next year.
It marks a distinct change from the volatility of recent years, when health insurance rates skyrocketed and Republican lawmakers on Capitol Hill sought to repeal the Affordable Care Act, also known as Obamacare.
For example, average rates rose more than 30 percent in 2018 and more than 20 percent the year before.
But that’s changing in 2019. Insurers appear to finally understand where to set their prices — and how to cover so many new people — in the age of the Affordable Care Act, said Michael Conway, interim commissioner of the Colorado Division of Insurance.
“We have a fairly competitive marketplace, and that was vitally important to set the stage for this year and that stability,” Conway said. “The market is probably at the point where it’s properly priced for the market as it exists today.”
Colorado isn’t alone in enjoying that stability. With insurers continuing to turn profits, many other states recorded only moderate rate increases — or, in some cases, even decreases — for 2019, said Rabah Kamal, policy analyst for Kaiser Family Foundation.
“Going into next year, insurers are doing pretty well, so they can’t necessarily justify a steep premium increase,” Kamal said. “And some insurers are correcting for overpricing in previous years.”
The rate increases only pertain to a customer’s premium, which is the monthly cost of their plan.
The rates also only apply to people on the state’s individual market, which do not include government- or employer-provided health insurance policies. The individual market encompasses 8 percent to 9 percent of Colorado’s population.
While the state’s overall average rate increase is 5.6 percent, the actual prices of those insurance plans vary widely by company.
For example, monthly rates for plans sold by Anthem will decrease 2.6 percent. That’s due to a requirement in the Affordable Care Act that limits the profits that insurance companies can reap in certain instances.
Meanwhile, Denver Health’s plans will increase an average of 21.6 percent. The carrier only insures a relatively small number of people in the Denver metro area, meaning that only a small number of pricey medical bills can have an outsized effect on rates, Conway said.
All other carriers on the state’s individual market expect single-digit rate increases in 2019.
The single-digit price increases come despite 2019 being the first year that people will no longer face a tax penalty for going uninsured, due to the repeal of the individual mandate.
Uninsured rates are expected to skyrocket with the mandate’s repeal, with 13 million more people expected to become uninsured by 2027, according to the Congressional Budget Office.
Conway said the mandate’s importance might have been overblown, and he predicted that many people will keep their coverage despite no longer being required to do so, because they now realize the value of it.
“A lot of folks thought that the mandate went away last year, so I think that if we were going to see a huge drop, we likely would have started to see it this year,” Conway said. “So I just don’t know that it’s going to have as big of an impact as some people feared.”
Still, Conway added that rates across the state likely would have decreased had it not been for the mandate’s repeal, as well as other actions taken by the federal government to unravel the Affordable Care Act.
The same is true for other states, Kamal said.
“It’s likely premiums would have gone down even more, or decreased in more instances, if not for the repeal of that individual mandate penalty,” Kamal said.
Even so, savvy shoppers and people eligible for tax credits on the state’s exchange, Connect for Health Colorado, can often expect to find even cheaper plans in 2019.
The average premiums for people who stick with their current plans and who receive those tax credits are expected to decrease by 24 percent in 2019, according to the state’s insurance division.
Those same people can find deals with rate decreases of 30 percent to 50 percent, if they shop around, the state’s Division of Insurance said. The tax credits are available to people earning up to four times the federal poverty level.
Some of that is due to “silver loading.”
The term refers to a decision by state regulators to allow insurers to make up for the loss of certain federal subsidy payments by jacking up rates solely on the silver-level plans sold on the exchange, rather than across the board.
As a result, tax credits available on Colorado’s exchange will jump — helping to offset most monthly price increases. Some Coloradans might even be able to find some bronze-level plans whose cost is offset by the credits.
Plans on the state’s small group market — which caters to businesses employing two to 100 people — will rise an average of 7.3 percent.
Still, there are few indications that price hikes — even moderate ones — will end anytime soon, experts said. Health care costs, including the ever-rising cost of prescription drugs, continue to be an issue across the nation.
“Unless we do more to really control these costs, we’re going to continue to see insurance rates increase,” said Adam Fox, director of strategic engagement for the Colorado Consumer Health Initiative.
Conway, the state’s interim insurance commissioner, acknowledged that problem and vowed to address it.
“It’s important to remember that the market stabilizing isn’t good enough.” Conway said. “We still got folks — especially folks that don’t receive tax credits — that are really hurting out there. And we have to find solutions for those folks.”
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