Private Health Insurance: The Range of Premiums and Plan Availability for Individuals in 2014 and 2015
Published: 2015-08-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: PPACA, as of 2014, changed how insurers determine health insurance premiums and how consumers shop for individual market health insurance plans. For example, PPACA prohibited insurers from denying coverage or varying premiums based on consumer health status or gender. At the same time, PPACA required health plans to be marketed based on their metal tiers (bronze, silver, gold, and platinum), which helps consumers compare the relative value of each plan; it also required the establishment of health insurance exchanges in each state, through which consumers can compare and select from among participating health plans.
GAO was asked to examine variation in the health plan options and premiums available to individuals under PPACA, and how the options available in 2014 compared to those in 2015. GAO examined: (1) the numbers of health plans available to individuals and how they changed from 2014 to 2015, and (2) the range of health insurance premiums in 2014 and 2015, and how they changed for individuals in each state and county for selected consumers. GAO analyzed data from the Centers for Medicare & Medicaid Services (CMS); reviewed applicable statutes, regulations, guidance, and other documentation; and interviewed officials from CMS. Comparisons across years were conducted for states that had sufficiently reliable data in both years—including comparisons of plans offered either on or off an exchange in 28 states (1,886 counties) and comparisons of plans offered only on an exchange for 38 states (2,613 counties) although GAO is reporting some data on 49 states.
section_title: What GAO Found
paragraphs: As of 2014, key provisions of the Patient Protection and Affordable Care Act (PPACA) resulted in the establishment of health insurance exchanges in each state and changed how insurers determined health insurance premiums. Individual market consumers generally had access to more health plans in 2015 compared to 2014, and in both years the lowest-cost plans were available through exchanges in most of the 1,886 counties GAO analyzed in the 28 states for which it had sufficiently reliable data for plans offered either on or off an exchange. In addition, consumers in most of the counties analyzed had six or more plans to choose from in three of the four health plan metal tiers (bronze, silver, and gold) in both 2014 and 2015, and the percentage of counties with six or more plans in those metal tiers increased from 2014 to 2015. Consumers had fewer options regarding platinum plans, although the availability of platinum plans generally also increased from 2014 to 2015. The lowest-cost plan available in a county was available on an exchange in most counties. For example, among the 1,886 counties analyzed, GAO found that the lowest-cost silver plan for a 30-year-old was available on an exchange in 63 percent of these counties in 2014 and in 81 percent of these counties in 2015—an increase of 18 percentage points.
The range of premiums available to consumers in 2014 and 2015 varied among the states and counties GAO analyzed. For example, in Arizona the lowest-cost silver plan option for a 30-year-old was $147 per month in both years, but in Maine, the lowest-cost silver plan options for a 30-year-old were $252 in 2014 and $237 in 2015. In the 28 states included in GAO’s analysis, from 2014 to 2015 the minimum premiums for silver plans available to a 30-year-old increased in 18 states, decreased in 9 states, and remained unchanged in 1 state. At the county level, GAO found that premiums for the lowest-cost silver option available for a 30-year-old increased by 5 percent or more in 51 percent of the counties in the 28 states. GAO also found that the range of premiums—from the lowest to highest cost—differed considerably by state. For example, in Rhode Island, 2014 premiums for silver plans available to a 30-year-old either on or off an exchange ranged from a low of $241 per month to a high of $266 per month, a difference of 10 percent, and in 2015 ranged from a low of $217 per month to a high of $285 per month, a difference of 32 percent. By contrast, in Arizona, 2014 premiums for these plans ranged from a low of $147 per month to a high of $508 per month, a difference of 244 percent, and in 2015 ranged from a low of $147 per month to a high of $545 per month, a difference of 270 percent.
An interactive graphic reporting by state and county the minimum, median, and maximum premium values for all individual market plans (either on or off the exchange) and for exchange-only plans, is available at http://www.gao.gov/products/GAO-15-687 . It includes either data for both years, or partial data (e.g., data for one of the two years) for 49 states.
GAO received technical comments on a draft of this report from the Department of Health and Human Services and incorporated them as appropriate.

section_title: Letter
paragraphs: Millions of Americans obtain health coverage by purchasing private health  insurance plans in the individual market. These Americans purchase  health insurance for a variety of reasons, including being self-employed or  a small business owner, or because their own employer does not offer  insurance. The Patient Protection and Affordable Care Act (PPACA), as  of 2014, changed how insurers determine health insurance premiums and  how consumers shop for individual market health insurance plans. For  example, PPACA prohibited insurers from denying coverage to any  individuals and from varying premiums based on consumer health status  or gender. It also established limits on premium variation based on age,  geographic location, and other factors. In addition, PPACA established  requirements for the benefits that must be covered by health plans— referred to as essential health benefits—and required insurers to market  their plans according to defined categories comparing the extent to which  the plans would be expected to cover the costs of enrollees’ medical  care.
PPACA also required the establishment of health insurance exchanges in  each state beginning in 2014—marketplaces through which individual  market consumers can compare and select health insurance coverage  from among all the health plans participating in the exchange. Some  states have established their own exchanges—referred to as state-based  exchanges (SBE). For consumers in states that have not done so, a  federal exchange has been established—which we refer to as the  Federally Facilitated Exchange (FFE). In general, plans available on  either an SBE or the FFE are also available for sale outside of the  exchange. The combination of all of these provisions allowed consumers  to directly compare the individual market health insurance plans available  to them based on premium costs, benefits covered, and plan generosity.
You asked us to examine the health plan options available to individual  market consumers under this new paradigm, the extent to which plan  options and premium costs available to consumers vary throughout the  United States, and how the plan options available in 2014 compared to  those in 2015. This report examines: (1) the numbers of health insurance  plans available to individual market consumers and how they changed  from 2014 to 2015, and (2) the range of health insurance premiums in  2014 and 2015 and how they changed for individual market consumers in  each state and county for selected consumers.
For both of our objectives we reviewed applicable statutes, regulations,  guidance, and other documentation, and we analyzed two sources of data  maintained by the Centers for Medicare & Medicaid Services’ (CMS),  Center for Consumer Information and Insurance Oversight (CCIIO)—the  FFE and Plan Finder databases—which included information on health  plans offered to consumers in calendar years 2014 and 2015. The FFE  database included data on all of the plans that were offered through the  FFE. These data were publicly available to consumers shopping for FFE  health plans using the Healthcare.gov website. The Plan Finder  database included information on plans offered outside an exchange,  including those offered exclusively outside the exchanges as well as  those available on or off the exchanges. These data were publicly  available to consumers shopping for health plans through the Plan Finder  online portal. The premium amounts and supporting plan information in  the FFE and Plan Finder data sources were self-reported by each insurer,  and each insurer was required to comply with a data validation and  attestation process.
Using these data, we analyzed aspects of plans offered to certain  categories of consumers at the state and county level, whether or not the  plans were offered on or off of an exchange. These included analyses of  the numbers of plans and premium costs available to the consumers in  each year and analyses of the changes in these numbers and costs  between 2014 and 2015. We selected the consumer categories to  represent the broad range of consumers who would shop for individual  market insurance. They included nonsmoking: individuals, aged 19;  individuals, aged 30; families of four, parents aged 40; couples aged 55;  and individuals, aged 64. We also conducted analyses at the state and  county level that focused on plans offered through an exchange for these  same categories of consumers. Our analyses focused on two categories  of plans—exchange plans (plans that were available on an exchange)  and all plans (whether or not they were available on an exchange)—for  both 2014 and 2015. Our analyses do not reflect the entire universe of  insurers’ premiums for plans sold on the SBEs or plans not sold through  exchanges, because the data for plans sold on the SBEs or plans not  sold through exchanges in the Plan Finder database were incomplete.  Because of this, we made certain exceptions in our reporting and only  reported data for states for which we had sufficiently reliable data, as  follows:
For our analysis of the numbers of health insurance plans available   to individual market consumers and how they changed from 2014 to  2015, we excluded from our analyses states where the percentage   of plans that reported premium data was less than 70 percent of the  universe of plans in either of the 2 years. We also excluded the state  of Virginia from our analyses because the 2014 FFE data for that  state included data that appeared to be erroneous. After these  exclusions, our analyses of all plans included data from 28 of the   50 states and the 1,886 counties within those states, and our   analysis that was limited to exchange plans included data for 38   of the 50 states and the 2,613 counties within those states.
For our analysis showing the range of health insurance premiums in  2014 and 2015 by county and year, we applied the same exclusions  noted above for all comparisons of data across years.
In an interactive graphic that reports the range of premiums by state  and county, we reported all data that was deemed sufficiently reliable  for each combination of plan category (exchange or all plans) and  year. As a result, we reported data for 49 states, including: complete  sets of data for 25 states for which we had sufficiently reliable data   for both plan categories in both years; and partial sets of data for   24 states for which we had sufficiently reliable data only for certain  elements. For example, in a state where we had information for fewer  than 70 percent of exchange plans in a given year, the interactive  graphic does not include any values for exchange plans for that state  in that year. We did not include any data for one state (Washington) or  for the District of Columbia because the data were not sufficiently  reliable in either of the plan categories in either year. See Appendix I  for details on the reliability of the data for each state.
To assess the reliability of the FFE data we interviewed CCIIO officials  with knowledge of these data. Officials confirmed that because the data  we obtained included all of the FFE health plan information that was  publicly available to consumers shopping for FFE insurance plans using  the Healthcare.gov website, those data effectively represented the full  universe of FFE plans and premium values available to consumers in  each year. To assess the reliability of the Plan Finder data, we reviewed  the requirements for the data validation and attestation process; reviewed  documentation on the database that houses the information submitted to  CCIIO; and interviewed key CCIIO officials responsible for overseeing the  submission and maintenance of the data. This allowed us to determine  that the data were sufficiently reliable for our purposes.
We conducted this performance audit from August 2014 to August 2015  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Individual Market Insurance under PPACA
paragraphs: Beginning January 1, 2014, PPACA required that health insurance plans,  whether sold on or off an exchange, offer a comprehensive package of  items and services—known as essential health benefits. At the same  time, PPACA required most individuals to maintain minimum essential  coverage for themselves and their dependents or pay a tax penalty—this  requirement is commonly referred to as the individual mandate.  Individuals who do not have other insurance coverage, such as from an  employer, may satisfy this requirement by maintaining coverage under  health plans offered in the individual market.
Certain PPACA provisions affected the way individual market plans are  marketed for consumers. In particular, PPACA standardized health  insurance plans into four “metal” tiers of coverage—bronze, silver, gold,  and platinum—which reflect out-of-pocket costs that may be incurred by  an enrollee. Bronze plans tend to have the lowest premiums but leave  consumers subject to the highest out-of-pocket costs when they receive  health care services, while platinum plans tend to have the highest  premiums and the lowest out-of-pocket costs.
The generosity of each metal tier is measured by the plan’s actuarial  value (AV). AV is expressed as the percentage of covered medical  expenses estimated to be paid by the insurer for a standard  population and set of allowed charges for in-network providers.   The higher the AV percentage, the lower the expected enrollee   cost sharing. For example, for a plan with an AV of 70 percent, it   is expected that, on average, enrollee cost sharing under that plan   will be 30 percent of the cost of care, while for a plan with an AV of   80 percent, it is expected that, on average, enrollee cost sharing  under that plan will be 20 percent of the cost of care.
PPACA includes standards related to AV and assigns a   specific actuarial value to each of the four metal tiers: bronze   (AV = 60 percent); silver (AV =70 percent); gold (AV = 80 percent);  and platinum (AV = 90 percent). If an insurer sells a plan on an  exchange, it must at least offer one plan at the silver level and one  plan at the gold level. Insurers are not required to offer bronze or  platinum versions of their plans in order to participate on exchanges.
PPACA provisions also affected the way individual market plans are  priced for consumers. For example, PPACA prohibited health insurers  from varying health insurance plan premiums on the basis of factors other  than age, geographic location and tobacco use—for which limits were  established. For example, the age factor used to adjust premiums may  vary by no more than a 3 to 1 ratio for adults aged 21 and older and must  use a uniform age rating curve to specify the rates across all adult age  bands. Premium variation based on health status or gender was  effectively prohibited.
section_title: Incentives to Shop for Plans Offered through Exchanges
paragraphs: PPACA does not require insurers to offer plans through the state or  federal exchanges. Similarly, it does not require consumers to purchase  plans through the exchanges; however, there are incentives for many  consumers to do so. For example, certain consumers earning from 100 to  400 percent of the federal poverty level are eligible to receive premium  tax credits that can reduce premium costs, but only for plans purchased  through an exchange. Similarly, certain consumers earning from more  than 100 percent to 250 percent of the federal poverty level are eligible to  receive additional subsidies that help them pay for the out of pocket  costs, but only for silver plans purchased through an exchange. Also,  the SBEs and FFE allow consumers to comparison shop for plans and  enroll in a plan online, whether or not consumers are eligible for premium  tax credits or cost sharing subsidies.
section_title: Individual Market Consumers Generally Had Access to More Plans in 2015 Compared to 2014, and the Lowest-Cost Plans Were Available through Exchanges in Most Counties in Both Years
paragraphs: Individual market consumers in every county in our analysis had access  to a variety of plan options each year, and the number of plans available  to consumers generally increased from 2014 to 2015. For example, in   28 states for which we had reliable data for all plans (offered either on or  off exchanges), the percentage of counties for which six or more plan  options were available to consumers increased from 2014 to 2015 for  three of the metal tiers—bronze, silver, and gold—and in 2015 consumers  in every county in these states had access to six or more plans in each of  these three metal tiers. Further, in 2015, among the 38 states where we  focused our analysis on plans offered on an exchange, we found that  consumers in 88 percent of the counties had access to six or more  bronze exchange plans, consumers in 94 percent of counties had access  to six or more silver exchange plans, and consumers in 71 percent of  counties had access to six or more gold exchange plans. Not all  consumers had access to platinum plans, however, the availability of  platinum plans generally also increased from 2014 to 2015. (See table 1.)
We also found that the lowest-cost plan options available in a county  were available on an exchange in a majority of the counties included in  our analysis. For example, among the 1,886 counties in the 28 states for  which we had sufficiently reliable data for plans both on and off an  exchange, we found that the lowest-cost silver plan option for a 30-year  old was available on an exchange in 63 percent of the counties in 2014  and in 81 percent of the counties in 2015—an increase of 18 percentage  points.
subsections: section_title: The Range of Premiums Available to Consumers Varied among the States and Counties in Our Analysis in Both 2014 and 2015 Premiums Varied Widely among the States in Our Analysis, and from 2014 to 2015 Premiums Were More Likely to Increase than Decrease
paragraphs: The premiums for the lowest-cost plan options available in each state  included in our analysis varied significantly from state to state. For  example, in Arizona (a state for which the lowest-cost premiums were  among the lowest in the country) the lowest-cost silver plan options for a  30-year-old were $147 per month in both years for plans both on and off  an exchange. By contrast, in Maine (a state for which the lowest-cost  premiums were among the highest in the country) the lowest-cost silver  plan options for a 30-year-old were $252 in 2014 and $237 in 2015 for  plans both on and off an exchange. Based on the full premium costs, on  an annual basis in 2015 a 30-year-old in Arizona who was not eligible for  a premium tax credit could have spent $1,082 less on the lowest-cost  silver plan available to them compared to what the same consumer in  Maine could have spent on the lowest-cost silver plan available to them.  The findings were similar when we conducted our analysis of plans  offered on exchanges in 38 states. Because each state in our analysis  uses a uniform age rating curve to specify the rates across all adult age  bands, each state would have the same relative differences in premiums  for all adult age categories. (See table 2.)
The premiums for the median-cost plan options available in each state  included in our analysis also varied widely. For example, in both years  Hawaii had among the lowest median premium costs for silver plans  offered to a 30-year-old either on or off the exchange—$217 per month in  2014 and $180 per month in 2015. By contrast, in both years Colorado  had among the highest median premium costs for such plans—$343 per  month in 2014 and $369 per month in 2015.
In most states, the costs for the minimum and median premiums for silver  plans increased from 2014 to 2015. For example, in the 28 states  included in our analysis, from 2014 to 2015 the minimum premium values  for silver plans available to a 30-year-old increased in 18 states,  decreased in 9 states, and remained unchanged in 1 state. Similarly, in  these same states the median premium values for silver plans available  to 30-year-old increased in 19 states, decreased in 8 states and remained  unchanged in 1 state.
Further, in general, states with higher than average minimum premiums in  2014 were more likely to have declines in 2015 premiums than the states  with lower than average minimum premiums in 2014. For example, the  average minimum monthly premium value for the silver plan option for a  30-year-old in 2014 in the 28 states included in our analysis was $193 for  plans offered on or off an exchange. Of the 13 states with 2014 premiums  for this group of consumers that were greater than $193, eight had lower  minimum premiums in 2015. Of the 15 states with 2014 premiums for this  group of consumers that were less than $193, only one state had a lower  minimum premium in 2015.
When analyzing premium costs at the county level, we found that from  2014 to 2015, premiums were more likely to increase than decrease. For  example, our analysis of the minimum premiums for silver plans in states  where we analyzed data on plans offered either on or off exchanges  found that premiums for a 30-year-old increased by 5 percent or more   in 51 percent of the counties. During the same time period, premiums for  these plans decreased by 5 percent or more in nearly 17 percent of   the counties, and increased or decreased by less than 5 percent in   32 percent of the counties. The findings were similar when we repeated  this analysis using the median premium value in each county and when  we limited the analysis to plans offered on exchanges. Because each  state in our analysis uses a uniform age rating curve to specify the rates  across all adult age bands, each state would have the same relative  differences in premiums for all adult age categories. (See table 3.)
section_title: The Ranges of Premiums Available to Consumers Were Much Narrower in Some States Compared to Others
paragraphs: We found that the range of premiums—from the lowest to highest cost— available to consumers differed considerably for the states included in our  analysis. For example, our analysis of premiums for silver plans available  to a 30-year-old either on or off an exchange found that the ranges of  premiums available were much more narrow in Rhode Island compared  to Arizona. In Rhode Island, 2014 premiums for plans ranged from a   low of $241 per month to a high of $266 per month, a difference of   10 percent, and in 2015 ranged from a low of $217 per month to a high   of $285 per month, a difference of 32 percent. By contrast, in Arizona,  2014 premiums for these plans ranged from a low of $147 per month to a  high of $508 per month, a difference of 244 percent, and in 2015 ranged   from a low of $147 per month to a high of $545 per month, a difference of  270 percent. In addition, between 2014 and 2015, the range from the  lowest- to highest-cost premiums available by state became wider in   18 out of the 28 states included in this analysis. The findings were   similar when we conducted our analysis for plans offered on exchanges   in 38 states.
We also found that the percentage difference between the minimum and  maximum premium in the states included in our analysis was generally  higher in states where the average number of plans available per county  was higher. For example, in both years, states with an average of 30 or  more plans per county had among the widest ranges between the lowest  and highest premium amounts. By contrast, states with an average of   15 or fewer plans per county had among the narrowest ranges between  the lowest and highest premium amounts. (See table 4.) Because each  state in our analysis uses a uniform age rating curve to specify the rates  across all adult age bands, each state would have the same relative  differences in premiums for all adult age categories.
When analyzing ranges at the county level, we found that among all the  counties in our analysis, the range of premiums available for different plan  options generally widened from 2014 to 2015. For example, among the  1,886 counties in the 28 states for which we had sufficiently reliable data  on all plans offered on or off an exchange, we found that the range in  silver plan premiums for a 30-year-old in 2015 was wider in 79 percent   of the counties compared to 2014. The findings were similar when we  conducted our analysis for plans offered on exchanges in 38 states.
In the interactive graphic linked to below, we provide files showing the  range of health insurance premiums, by county, that were available to  selected categories of consumers for exchange plans and all plans  (whether or not they were available on an exchange)—for both 2014 and  2015. Twenty-five states include complete sets of data for both years.  Twenty-four states include partial data if certain date elements were not  sufficiently reliable to report. For example, in a state where we had  information for fewer than 70 percent of exchange plans in a given year,  we do not report any values for exchange plans for that state in that year.  We do not include any data for the state of Washington or the District of  Columbia because the data were either not available or not sufficient in  both years. See figure 1 for an illustration of premium information  available via the interactive map available at the website.
This graphic can be viewed by linking to the interactive map found at  http://www.gao.gov/products/GAO-15-687.
section_title: Agency Comments
paragraphs: We received technical comments on a draft of this report from the  Department of Health and Human Services and incorporated them as  appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  Secretary of Health and Human Services and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staffs have any questions regarding this report, please  contact me at (202) 512-7114 or dickenj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix II.
section_title: Appendix I: States Included and Excluded from GAO’s Analyses
paragraphs: Appendix I: States Included and Excluded from  GAO’s Analyses offered on an  exchange for  facilitated exchange  (FFE) or state based  “all plans”  analyses   exchange (SBE) exchange(Y or N) (Y or N)
N  offered on an  exchange for  facilitated exchange  (FFE) or state based  “all plans”  analyses   exchange (SBE) exchange(Y or N) (Y or N)
We excluded 2014 data for Virginia from our analyses because, even though the percentage of plans  that reported premiums data was greater than 70 percent of the universe of plans in 2014, there were  several outliers that made the data unreliable for this year.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, individuals making key  contributions to this report include Gerardine Brennan, Assistant Director;  Todd Anderson; George Bogart; Matthew Byer; and Laurie Pachter.