By Sabrina Corlette
July is fee assessment season for state insurance coverage departments—the annual strategy of accumulating proposed medical health insurance premiums from insurance coverage carriers, assessing whether or not they’re cheap and justified, and, in lots of states, approving or disapproving them. In a couple of states, regulators require that insurers submit their fee filings in Might or June, earlier than the July federal deadline. Additionally they publish proposed charges and supporting documentation on their web sites.
For the previous a number of years, CHIR has dug into these early filings as a result of they may also help reveal how insurers are responding to market traits, coverage modifications, and underlying drivers of well being care price development. This yr, not like in previous years, insurers’ proposed 2025 premium charges don’t look like considerably affected by national-level insurance policies or traits. Federal insurance coverage market coverage has been comparatively secure, and the consequences of the COVID-19 pandemic are waning. Nonetheless, this hasn’t inhibited some insurers from proposing fee hikes properly above the speed of inflation for 2025. On this weblog, we dig into the assumptions and justifications behind these premium will increase, for particular person and small-group market well being plans, within the District of Columbia (DC), Maine, Maryland, Oregon, and Vermont.
Insurers’ Charge Filings Search Premium Will increase For 2025
Notably, some state insurance coverage departments do a greater job than others offering the general public with entry to fee submitting supplies. Amongst our chosen states, Maryland stands out for its lack of transparency—insurers there are permitted to redact from public view giant parts of every fee submitting. Nonetheless, the restricted transparency in Maryland remains to be higher than in lots of different states, reminiscent of Illinois, the place the overwhelming majority of insurers’ actuarial memoranda is redacted, or Virginia, which doesn’t publish proposed fee filings in any respect.
Throughout the board, insurers within the particular person market in our chosen states are in search of to extend charges for 2025, though the dimensions of the rise varies fairly a bit throughout firms and merchandise. See Desk 1.
Desk 1. Common Proposed Particular person Market Charge Adjustments in Chosen States (Plan Yr 2025)
| State | Highest Common Charge Request (%) | Lowest Common Charge Request (%) |
| DC | 9.0 (Kaiser Basis Well being Plan) | 3.6 (CareFirst BlueChoice) |
| Maine | 15.8 (Harvard Pilgrim Well being Plan) | 3.9 (Taro Well being Plan) |
| Maryland | 14.2 (CareFirst Blue Cross Blue Defend – PPO) | 3.2 (CareFirst BlueChoice – HMO) |
| Oregon | 8.4 (BridgeSpan) | 2.0 (MODA Well being Plan) |
| Vermont | 16.3 (Blue Cross Blue Defend) | 11.7 (MVP) |
*Supply: Authors’ evaluation of particular person market fee filings.
Insurers within the small-group market are additionally requesting worth hikes, with vital variation throughout our chosen states and among the many firms. See Desk 2.
Desk 2. Common Proposed Small-Group Market Charge Adjustments in Chosen States (Plan Yr 2025)
| State | Highest Common Charge Request (%) | Lowest Common Charge Request (%) |
| DC | 8.0 (Kaiser Basis Well being Plan) | 1.4 (CareFirst BlueCross BlueShield – PPO) |
| Maine | 19.6 (Maine Neighborhood Well being Choices) | 3.9 (Taro Well being Plan) |
| Maryland | 21.7 (Aetna – PPO) | 3.2 (CareFirst BlueChoice – HMO) |
| Oregon | 8.4 (BridgeSpan) | 2.0 (MODA Well being Plan) |
| Vermont | 16.3 (BlueCross BlueShield) | 11.7 (MVP) |
*Supply: Writer’s evaluation of small-group market fee filings.
An examination of the assumptions and projections underlying the proposed fee will increase reveals a number of components and traits.
Insurers’ prime price driver is “medical pattern,” a mix of the projected modifications in unit prices (the costs insurers pay for well being care items and providers) and modifications in service utilization (the quantity and depth of providers enrollees obtain). A number of insurers level specifically to rising pharmacy prices. For instance, Blue Cross Blue Defend of Vermont predicts a year-over-year pattern of 14.8% for simply the GLP-1 class of medicine (i.e., Wegovy and Ozempic).
Within the particular person market, insurers look like shrugging off the disenrollment of nearly 14 million folks from Medicaid, no less than in our chosen states. One Vermont insurer (BlueCross BlueShield) believes that the folks transitioning from Medicaid to the Market have contributed to a bigger, more healthy danger pool, however an Oregon insurer (BridgeSpan) predicts that Medicaid transitioners will make the person market danger pool sicker. General, nonetheless, most insurers are projecting little, if any, change within the well being standing of the person market danger pool in 2025.
It’s (Nonetheless) the Costs, Silly
Though most insurers are projecting the price of specialty medicine to rise extra steeply than another issue, additionally they are projecting that hospital prices – notably the expansion in hospitals’ contracted charges – would be the largest contributor to shopper and small employers’ 2025 premiums. There are a couple of exceptions; CareFirst BlueChoice within the District of Columbia predicts that well being care utilization will develop quicker than its supplier costs. For essentially the most half, nonetheless, the expansion in supplier costs, not utilization, is the first driver behind rise in medical pattern. Or, as put by famend well being economist Uwe Reinhardt and colleagues, “It’s the Costs, Silly.”
A Blind Spot? Whereas Unit Costs Rise, Carriers Deal with Utilization
Though rising unit costs are the largest issue driving fee will increase for many insurers, of their filings they level to utilization administration as their major technique for holding prices. For instance, Oregon requires insurers to submit narrative stories detailing their efforts to constrain price development. Virtually universally, Oregon insurers are focusing their efforts on packages that cut back using well being care providers, reminiscent of by means of extra aggressive prior authorization, claims auditing, and case administration for enrollees with complicated care wants.
The filings revealed only a few efforts to cut back unit costs. These embody a program by BridgeSpan in Oregon to encourage enrollees to hunt care at ambulatory surgical procedure facilities as an alternative of full-service hospitals. One other insurer (MODA) stories that they had been capable of generate $4 million in financial savings in air ambulance prices alone, due to the federal No Surprises Act (NSA), stating: “Implementation [of the NSA] resulted in enhancements in contractual phrases with in-network suppliers and a discount in prices with the applying of the Certified Cost Quantity (QPA) for out-of-network claims.” In Maryland, Aetna stories that they’re “working to cut back the flexibility of out-of-network suppliers to gather unreasonably extreme funds,” though they don’t describe how they intend to perform this.
Native Components Driving Charge Adjustments
State-based coverage and market modifications are additionally driving some fee modifications. For instance, the Vermont legislature just lately enacted restrictions on insurers’ capability to conduct prior authorization. Vermont insurers are predicting vital price will increase on account of that invoice. MVP well being plan, for instance, predicts it is going to end in an 8-10 p.c improve in premium charges.
In Maryland, the elevated shift in direction of level-funded well being plans amongst small employers is probably going contributing to fee will increase for the state-regulated small-group market. For instance, Aetna, which is in search of a 21.7 p.c common improve for its small-group market PPO product, notes that the “motion of [small-group] enterprise between the ACA market and different choices,” reminiscent of level-funded plans, is prompting will increase in common premiums and a much less wholesome danger pool.
Wanting Forward
Well being insurers within the ACA-compliant particular person market have benefited from a number of years of relative stability and development. Nonetheless, as with the remainder of the industrial insurance coverage market, they’re confronting elevated supplier consolidation and ever-rising supplier prices, which they’re in flip passing onto shoppers by means of increased premiums. Due to the ACA, Market enrollees eligible for premium tax credit are largely insulated from these worth will increase, and the improved subsidies supplied within the Inflation Discount Act have considerably improved the affordability of Market plans. Nonetheless, these enhanced subsidies will expire on the finish of 2025. If Congress doesn’t prolong the subsidy enhancements or do extra to constrain well being care costs, extra people will likely be ineligible for subsidies and can bear the brunt of rising well being care prices.
Premiums are additionally rising for a lot of small employers, as a result of each rising supplier prices and the shift of wholesome employer teams into level-funded plan choices. States have a lot of choices to protect and shield the ACA-compliant small-group market, together with however not restricted to a Maine-style reinsurance program, a Colorado-style public possibility, and Rhode Island-style enhanced fee assessment.