Charles Gaba at ACASignups.net is doing an admirable job of tracking requested rate increases for ACA compliant plans for the individual and small group markets in a variety of states. For instance, he recently posted on his home state of Michigan:
assuming that all of my numbers (or at least all of the major ones) above are accurate, it appears that the requested average 2016 premium rate increase on the individual market in Michigan next year is around 9.8%….
The weighted price increase in 2016 will be less than 9.8% in Michigan for the policy universe mentioned above.
The first reason is that these are initial request numbers to state regulators. State regulators almost never accept the initial numbers. This year, it is extraordinarily unlikely that state regulators will accept initial numbers quickly as every Healthcare.gov state will be waiting for the Supreme Court. A ruling for the government and current subsidies rules means a moderate delay; a ruling for the plaintiffs means a mad scramble for new rates.
Secondly, and more importantly, we have to model some type of plan switching behavior as people aggressively switched plans in 2015 in response to absolute and relative price changes. Over 30% of renewals in 2015 were active renewals and a third of those renewals were plan switches. A large proportion of the switches in 2015 went from higher cost plans to lower cost plans. I think that this dynamic will be a constant in the ACA as pricing is transparent, on exchange buyers tend to be extremely cost aware as they tend to have less money than the average American with group sponsored coverage, and the products can be reasonably compared.
I project that the effective total net price increase after an open enrollment period will only be two thirds of the pre-open enrollment membership weighed average as people will be leaving higher cost plans and moving to lower cost plans far more frequently than flowing the other way. This prediction will get stronger in 2017 and beyond as the Exchange markets should have finished converging to reality as the actuaries, underwriters and pricing seers will have sufficient claims data to make informed predictions instead of educated guesses on risk pool composition.