There is more than one way to view this news. First, keep in mind that profit is a small percentage of your total premium so there is only so much to work with; competition has its limits. Second, keep in mind that the PPACA limits non health care expenses built into premiums. Next, this market is still very dynamic and actuaries are feeling their way. Finally, bad risk and adverse selection are being subsidized (by employers) through 2016. In effect, nothing is real at this point. Time will tell.
The picture may change if enrollment increases to thirteen million as predicted in 2015
Obamacare premiums, once predicted to skyrocket in the second year under the government’s marketplace, have risen about 6 percent for 2015, according to an analysis of preliminary state filings.
While foes of the Affordable Care Act warned of double-digit rate increases, the costs of premiums seen so far is more modest for the new year. One reason may be that insurers who came in high in 2014 found themselves beaten out for enrollments. At the same time, 77 new insurance plans will be competing for customers in 2015, U.S. officials say.
“We made a decision several years ago that health rform is not as much a law, as it is an opportunity,” said Scott Streator, a vice president at Dayton, Ohio-based CareSource who manages plans sold under the Patient Protection and Affordable Care Act known as Obamacare.
CareSource, a nonprofit insurer, gained almost 20 percent of Ohio’s Obamacare enrollees in 2014 by offering some of the lowest premiums in the state. Now, with enrollment set to reopen Nov. 15, the company is extending its health plans into neighboring Kentucky and Indiana.
The Affordable Care Act was designed to let insurers aggressively compete for customers within a new system of government-run marketplaces. Early results from companies such as CareSource suggest it is succeeding.
Insurers and the Obama administration have long cautioned that the new markets created by the law would take time to settle, as health plans assess their new customers and work through hiccups in their relationship with the government. The Affordable Care Act explicitly recognizes a transition period, with temporary programs through 2016 to backstop insurers’ potential financial losses.