Saturday, August 23, 2014

Lower-than-expected 2015 rates would be huge news for the Arkansas Obamacare Marketplace

Posted By on Sat, Aug 23, 2014 at 2:20 PM

Regarding the accidental leak of information on rate filings for the 2015 Arkansas Health Insurance Marketplace, commenter Timbo asks, "if all of the above is subsequently confirmed then is this news, big news, BIG news, or front-page-of-the-NY-Times BIG news?"

I won't speak for the New York Times, but if the proposed rates we saw yesterday turn out to be anywhere close to the insurance rates in 2015, it would be a very, very big development and represent extremely good news for the private option in particular (you might even call it a game changer!).

The major caveat: that's still a big IF. The information we reported on yesterday remains unconfirmed; even assuming it's completely accurate, these rates are not yet finalized. That said, we've now had a preliminary peek at proposed rates, and while the Arkansas Insurance Department now won't confirm or comment, the information was confirmed as accurate yesterday morning (to Pricewaterhouse Coopers) by a staffer at AID's premium rate review division, right before the entire Insurance Department sealed their lips. If that snapshot gives us a good picture of the 2015 Marketplace, what does that mean? 

First, consider that before Obamacare, health insurance premiums for consumers buying coverage on their own was growing 10 percent or more per year, based on a recent study that looked at insurance rates from 2008 to 2010. The proposed rates we saw yesterday would represent premiums for the Obamacare Marketplace falling 3.5 percent in 2015. Obamacare advocates assumed that rates would go up; their hope was that they would rise more slowly, or be about the same, compared with what we've seen in the individual insurance market recently. Of course, as Jonathan Cohn points out, the law's critics thought that rates in 2015 would skyrocket: 

premiums in 2015 would soar, these critics said, because the people signing up for coverage would be older and sicker than the insurance companies had expected. ... References to Obamacare premiums "doubling" and even "tripling" were all over the right-wing press.

Here in Arkansas, some critics even thought that yesterday's data suggested giant Obamacare rate hikes in Arkansas (50 percent!), even though it actually showed the opposite (for more context, see our post from yesterday).

If the Arkansas Health Insurance Marketplace sees only a relatively small increase in rates, it would be a victory. If the Marketplace rates don't increase at all, or even fall? That's a home run. 

See this followup post for what this means for the private option: If the Marketplace rates do turn out to be lower than expected, the private option likely deserves a lot of the credit. And lower rates would be an extremely positive development for the private option.


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