Rate Changes For 2015 Colorado Obamacare Rate Are Looking Mixed

Yesterday Colorado's Division of Insurance released the first batch of health insurance rate filings with the premium rate change requests insurers are making for plans on the Colorado Exchange.

While these rate requests are not final the numbers are a useful indicator of what the carriers have been seeing in costs and what they're thinking in terms of premiums going forward.

Company

Lives CoveredMin Chg %Max Chg %Wgt. Avg

HMO Colorado

112,095-36.513.4-5.1

Colorado Health Insurance Coop

7,965-37.89-.74-9.63

Humana

12,800-3.1112.1

Kaiser

30,322-9.314.37

Cigna

4,0812.5810.426.07

Colorado Choice

6,1160.88.56.6

Denver Health

54514.318.417.5

Rocky Mountain HMO

16,296-2.225.43.1

The first takeaway from the filings is that consumers will see a wide variation of premium changes going into 2015, with some plans lowering premiums significantly and others raising rates.

One aspect that does stand out in Colorado is the distribution of lives covered and how it correlates with the rate changes. In our previous examination of states that have released rate requests including Washington and Virginia, the carriers with the largest requested rate increases were also those that had the most members. The popularity of those plans could attributed to the competitive pricing offered by those companies with lower 2014 premiums than other available options. In Colorado however, HMO Colorado a division of Anthem/Wellpoint (NYSE:WLP) despite having the largest number of lives covered had 2014 pricing that was high enough to warrant a reduction in average premiums overall.

Within the carriers however there can be still a decent amount of variability in how the plan premiums will be adjusted. While all but one insurer had average rate increases of 7% or under, consumers may find their personal experience differing sharply. Even within HMO Colorado where the average policyholder is expected to see a 5.1% decrease in rates, some will be subject to a 13.4% increase. The actual incurred rate changes that a consumer incurs will be dependent upon their current policy as well as where they live.

Rating Area Combination Having an Impact

One major reason that some consumers will see large rate increases is due to the changes in the rating areas as of May 2014. The state was previously divided up into 11 regions, with the recent changes reducing them to 9. Insurers adjust the rates consumers pay based upon where they live, and must all similar residents in a particular area are given the same rate.

As part of this reduction 4 of the rural areas were combined into 2 larger divisions, including among them the pricier resort areas which had some of the highest insurance costs in the country. By merging these rating areas however, the rates in the newly formed regions are effectively the average of the more expensive area and it's cheaper counterpart. As a result residents that lived in the more expensive rating area are likely to see their rates drop dramatically while those that had benefited from lower rates will have their's raised to compensate. We expect that the biggest differences in rates both up and down will be borne by consumers living in the newly combined areas.

Jonathan Wu

Jonathan is the CEO and Co-Founder of ValuePenguin. He reports on an array of topics, including the financial services industry, healthcare reform, and financial products for consumers. He previously worked in the financial services industry, including at such hedge funds as Avenue Capital Group.

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