Market Institute Summary of Urban Institute Analysis Brief
The Urban Institute recently issued a brief detailing their belief that health insurance premiums would not be as high (double-digit growth) as first thought. With open enrollment over and Medicaid rolls being substantially higher, it was estimated health insurers would try to offset artificially lower 2014 premiums by raising 2015 premiums. 2014 premiums were well below expectations, even in rural areas, and the most likely explanation for this is the managed competition structure of the ACA marketplaces. Evidence suggest that insurers were pricing aggressively to gain market share. In general, premiums for adults in the nongroup market compare favorably with premiums in the pre-reform small employer market.
An argument could be made that 2015 premiums will be made substantially higher because of the aggressive pricing by insurers in 2014, however in a competitive market, those insurers that do raise prices will lose market share. Market conditions could make it so consumers in rural areas do see substantially higher premiums, but nation wide, premiums should not necessarily “skyrocket.” An issue that is cause for concern is the idea that insurers with smaller market shares in 2014 could then pull out of that market in 2015, limiting competition. There are multiple reasons to conclude that premiums will go up substantially in 2015, but the prevailing force in lower 2014 premiums will remain intact: incentives for market competition. More stable risk pools and increased enrollment should add downward pressure to healthcare insurance premiums.
Link to Urban Institute Analysis:
