Premiums grew average of 10% before Affordable Care Act

 Health insurance premiums went up an average of 10% a year in the three years before the Affordable Care Act was enacted, a report released today finds.

"The two main lessons are the notion that there was a pre-existing double-digit trend, and that it was variable," said Jonathan Gruber, author of the Commonwealth Fund report and a professor of economics at the Massachusetts Institute of Technology. "It could have gone up 100% for a sick guy and gone down some for a healthy guy."

This was the first time a national analysis of premiums had been conducted, in part because insurers were not required to file rate increases before the ACA, Commonwealth Fund President David Blumenthal said. The Commonwealth Fund is a private think tank that promotes access to health.

Historic premium information is important as a baseline to compare premium changes as insurers set rates after the ACA, as well as as a reminder that premiums have been increasing steadily for years, Gruber said.

Before the Affordable Care Act, insurers could charge people more or deny them coverage for preexisting conditions, such as diabetes. In some cases, they could raise rates without reporting it to state insurance commissioners. Beginning in 2011, they had to report rate increases of more than 10% because of the ACA, and beginning with 2015 rates, they must report all increases.

"The individual insurance market has always been volatile, and people with individual coverage often experienced large premium increases," Gruber said. "Until now, we haven't had data to tell us what those increases looked like."

Gruber looked at data from the 22 states that did require rate information, as well as data from the National Opinion Research Center.

Rate increases ranged from 3% in Iowa to 15% in Wisconsin in 2008, he found. In 2009, New Jersey had the lowest rate with 4%, but Connecticut saw increases of 20%. And in 2010, Idaho was low with 3%, while Nebraska saw increases of 22%.

But the differences, even within the same plan, were not equal: In 2008, 10% of people had no increase in premiums, while a second 10% faced increases of 18% or higher.

"I think we have, over the long term, faith that information put out in the public will ultimately affect the debate," Blumenthal said. "This report reminds us where we were before the consumer protection rules took effect."

He added that a 10% increase under an ACA policy might also be a "better deal" than a 10% increase pre-ACA because new plans must include more robust benefits, such as prescription and hospital coverage.

In 2014, Gruber said, premiums were 16% lower than what the Congressional Budget Office projected. Rates for 2015 are still being filed.

But so far, according to ValuePenguin, a company that compares health data to help consumers make decisions, Washington state has seen a low average increase for one insurer of 1.7% and a high average increase for another insurer of 11.2%. Several other insurers fall in-between. Using the exchanges when open enrollment begins in the fall, consumers will be able to compare those prices before deciding which plan to buy through the health exchanges.

And Virginia saw a low average for one insurer of 3%, while a second one averaged a 15% increase. Members of the Society of Actuaries are projecting increases between 6% and 8%.

But the report comes as opponents of the law have touted rate increases as proof that the law is ineffective. Last week, the Ohio Department of Insurance said individual premiums would increase an average of 13%.

"It's bad news, no doubt, but it's what we expected, and it's what the research we did in advance predicted," said Ohio Lt. Gov. Mary Taylor on the state website.

But the Cleveland Plain Dealer looked at the plans, and found that most plans had asked for single-digit increases, and that they were often much lower — about 7% — than increases in years prior to the ACA. The insurance department included only partial information, the paper found.