Maryland released their final ACA rates yesterday. The average non-subsidized rate will decrease by 13.4 percent for anyone who does not age.
Maryland was one of the first states out of the gate with preliminary rate hikes this spring. The early projection was an average of a 30% increase with one insurer wanting a 91% spike.
So what happened?
Charles Gaba has a good summary that I want to extend on:
Thanks to swift, bipartisan action on the part of the Democratically-controlled Maryland state legislature and the Republican Governor, Maryland was able to pass several bills which partially negated or cancelled out Trump/Congressional Republican sabotage of the Affordable Care Act. In particular, they passed laws which locked in current restrictions on both short-term plans and association health plans (the types of “junk policies” which Trump is pushing hard to expand upon)…along with an extremely robust reinsurance program….
It is also a timing issue. For an insurer to file preliminary rates for May 1, they can only use claims through about April 15th to see what the recent past implies about the near future. This creates a run-out problem. An insurer will have 95% of January,90% of February, 50% of March and a handful of April claims. If policy is fairly consistent, insurers will have well developed seasonality adjustment factors that will be usefully wrong.
Policy has not been consistent. Insurers were dealing with trying to project the CSR population, they were trying to project the impact of no individual mandate and they were trying to figure out the impact of short term limited duration rules. They were doing this on maybe 60% of the actual claims of a little more than a quarter of the year where consumer behavior due to Silver Loading and Gold Gapping was going to be different than previous years.
And then policy continued to change over the summer. Maryland applied for and received a waiver for reinsurance which injects significant new money into the claims payment pool that does not come from premiums. Maryland added certainty regarding short term limited duration plans. CMS did not ban Silver Loading and the claims information coming in allowed actuaries to firm up their projections as the worst case scenarios that justified 2018 pricing has not come to pass.
With Maryland coming in as a reduction, this is the end of the potential rate shock story.