Charles Gaba is passing along that Oregon has approved their Exchange rates for 2015. There are two important policy points that leaped out at me.
The first is from the Oregonian:
Insurance rate decisions were issued by the Oregon Insurance Division Thursday and announced today, showing a tighter range of premiums in the individual market for people not covered by employers or Medicare. [emphasis mine]
We should expect clustering of price points, especially on the lower end of the Silver market.
The Exchange and subsidy design create the first segment of the Silver market…. All subsidies on the Exchange are based on allowing an individual to buy the second cheapest Silver plan on the Exchange for a percentage of their income. ….there is a strong incentive for insurers to offer at least a Silver plan that is either the cheapest two Silvers or very close to the subsidy cut-off.
This segment in a competitive market should see a cluster of plans that are at the subsidy line plus or minus a couple percentage points.
If we take 2014 as fundamentally a beta testing year as well as an information gathering year for insurance companies, we should have expected to see the companies that priced too optimistically or aggressively increase their rates while companies that were too pessimistic decrease their rates as new information about the actual composition of the risk pool became clearer. It is still messy, but the entrails are now legible as if a fourth grader still learning cursive wrote the details instead of a too busy doctor writing out the last prescription for hillbilly heroin at the end of a forty eight hour shift.
The second interesting note is related to the above point:
Moda’s once market-leading rates have jumped to middle of the pack. For a silver plan, a 40-year old in Portland can find four insurers with lower premiums approved by the state.
Moda subscribers/members will see premium/subsidy shock if they don’t actively change. They are moving from the cheapest and therefore the best subsidized Silver plan to a plan that requires out of pocket premium payments over and above the minimal income charges. Other companies saw Moda pick up a lot of membership as Moda offered the cheapest plans, so the other companies cut their rates, cut their networks, and attempted to price below Moda. Four companies seem to have accomplished this.
It almost looks like a managed competition model with clear pricing points and subsidy structures is working to effectively shape a market to reduce premium increases compared to typical history.