In the Midst of “Rate Shock” Fears, Insurers Request Lower Rates in Oregon

An interesting thing happened in Oregon last week. The Division of Insurance (DOI) posted insurers’ proposed premium rates for 2014. That in itself isn’t so interesting – the DOI has one of the more transparent rate review programs in the country and publicly posts rates when they’re first filed. So these weren’t final rates – the DOI will review these rate requests and approve them, disapprove them, or request changes. Oregon consumers viewing the posting can compare companies’ proposed rates for a standard plan, showing differences based on age, geographic region, and three levels of benefits (Bronze, Silver and Gold). They’ll see big differences in premium rates among the plan options.

For example, in the Portland area, one company proposes charging a 21-year old $132/month for a Bronze-level plan while another would charge that 21-year old $330/month for a plan with the same benefits and cost-sharing. Similar price variation is seen for plans sold to small businesses.

What’s interesting is that, shortly after the DOI posted the rates, the Oregonian reported that two insurers asked the DOI to let them lower their proposed rates, before the DOI had even begun its review process. According to the Oregonian, Providence Health Plan asked to lower its rates by 15% and Family Care Health Plans asked for an even greater decrease. A Providence Health Plan executive attributed their request, at least in part, to a desire to be competitive. And an executive from Family Care concluded that they’d been too pessimistic in their actuarial projections after seeing competitors’ proposed rates.

This is positive news for Oregon consumers, especially in the wake of an actuarial report commissioned by the state last year predicting that many would face higher premium costs as a result of the insurance reforms in the Affordable Care Act. However, it’s also important to note that there are features of Oregon’s insurance market that don’t exist in all states. First, Oregon has a highly competitive insurance market, relative to the rest of the country, with half a dozen major insurers who compete fiercely for market share. Second, Oregon’s highly transparent rate review program (as I documented in a recent issue brief for the Robert Wood Johnson Foundation’s project to monitor health reform implementation across 10 states) allows consumers and competing health insurers to see proposed rates before they’re finalized. Third, Oregon passed a law in 2011 requiring insurers inside and outside the exchange to offer a standardized health plan. This is a critical reform, because it allows for true, “apples-to-apples” comparisons among the plan options.

Oregon is one of a handful of states (including Rhode Island, Vermont, and Maryland) that have released preliminary 2014 rates. More will soon follow, so stay tuned to CHIRblog for updates and commentary.

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