Forget about taking a deep, relaxing breath at the end of 2014's open enrollment in the exchanges. Before anything from 2014 has settled, 2015 is already knocking at the front door.
Prospective exchange participants must file 2015 rates at the end of May, less than two months after open enrollment's end and six weeks after conclusion of the special enrollment period. States will review those rates over the summer and weigh the appropriateness of the increases.
Plan enrollment remains something of a guessing game in most states. Only a few sets of 2015 rates have dribbled out. As the old saying goes, if you've seen one state's 2015 rates, you've seen one state's 2015 rates. Premium proposals in all 50 states (plus Washington, D.C.) will be different, as will be the reactions of carriers and consumers.
At this point, it is still difficult for insurers to know their exchange populations and demographics. Some enrollees signed up as late as April 15. With only scant claims, they will have little information to gauge those premiums. A significant number probably haven't used any benefits yet. Healthier enrollees might not account for more than a physical or a sinus infection. Only the sickest enrollees people formerly covered by high-risk pools will offer claims to this point.
One criterion will play a huge role, because it's an easy one to determine: the average age of the exchange enrollee. In many states, the demographic leans older, and these populations will have more health concerns.
For what little we know of 2015, some takeaways have emerged.
Competition will grow.
There has been a flurry of announcements from carriers planning to enter exchanges in 2015. At least one, Aetna, plans to stay put and won't expand into new states. The two states with only a single insurer in their exchanges, New Hampshire and West Virginia, will both have new competitors next year.
Successful state-run exchanges in California, Kentucky, and Washington all anticipate new players, as will many federally facilitated exchange states. After being among the most conservative exchange players in 2014, UnitedHealthcare will add several markets, such as Indiana, which could have up to eight insurers in 2015, double its 2014 market.
Some Southeastern states have only two competitors, usually a state Blue Cross and Blue Shield plan selling statewide policies. Announcements in this region have been slim thus far, but it will be interesting to see if any insurers expand into these markets for 2015. North Carolina, which enrolled more than 350,000 people despite limited competition, could be attractive to national insurers.
More encouraging at this point is that no carriers have announced plans to quit the exchanges. Some could drop out before the next open enrollment in November. But early indications are that insurers that sold exchange business in 2014 are taking a longer look and don't plan to bail after the first cycle. Penalties increase in 2015, though, at which point the market could see significant churn.
Premiums will increase, the reasons why will vary.
In any open enrollment or plan renewal cycle, rate adjustments will occur. But whatever happens in this cycle will be tied to the Affordable Care Act. Markets with less competition could face increases. And states that did well won't be immune. Washington's exchange had a successful open enrollment, but all carriers except Molina Healthcare came back with higher proposed rates in 2015. Plan rates will vary in the state, and there could be pushback from State Insurance Commissioner Mike Kreidler, who initially rejected four insurer applications for 2014's open enrollment.
Premera Blue Cross dominates the Washington market. Among three product lines (Premera, LifeWise, and a multi-state Blue plan), the state's exchange enrolled 91,809 of the 147,000 qualified health plan enrollees. Under Premera's proposal, premiums would rise an average 8.25 percent.
Molina made a big exchange investment in 2014, rolling out commercial plans in all its states (although in Washington, its 2,024 enrollees represent a sliver of the market). Lower premiums should make Molina more attractive to consumers in 2015. Carriers in other states, especially CO-OPS that made little headway in their respective markets, could drop out. Even in a three-insurer market like Connecticut, the CO-OP enrolled only 3 percent of those buying exchange policies, a sign that premiums might have to go down if the company is to survive.
Competition might not be the only driver of lower premiums. While most rates will increase, some drops are inevitable. Some carriers priced plans high for 2014 to defend themselves against attracting too many high-cost enrollees. With a broader pool in place, some rates could drop.
Months of rate reviews and insurance department challenges will likely ensue. In all likelihood, 2015's market will settle right around the time we start exploring changes for 2016.
Follow Bill Melville on Twitter @BillMelvilleDRG