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Are low exchange premiums sustainable?

Insurers 'working off assumptions,' may eventually raise rates dramatically

Insurers are still trying to get a handle on how to price premiums in the health insurance exchanges so they can afford to cover new enrollees and make money.

The pricing conundrum is particularly clear in Colorado, reported the New York Times. There, 10 insurers sell almost 200 plans on the state's health insurance exchange, where many plans have dramatically altered their premium prices. Based on a Times analysis, for example, one silver plan's premium increased 36 percent, while another dropped almost 40 percent. The plans were available in different regions of the state.

"Because we're all working off assumptions this year, there's been a lot of divergence in thinking," Neil Waldron, who oversees strategy for nonprofit insurer Rocky Mountain Health Plans, told the Times.

The problem, however, is that experts question whether the low prices are actually sustainable, potentially forcing insurers to dramatically raise prices in the future. Those costs are likely to remain unstable, too, as insurers switch between offering low premiums to attract members and increasing prices to cover their own costs.

What's more, some insurers failed to accurately predict how many consumers they could enroll and how much it would cost to provide them coverage. Minnesota's PreferredOne, for example, signed up the majority of the state's individual market last year. Then it increased its rates by an average of 63 percent for next year and stopped selling policies through the state exchange.

CoOportunity Health, a consumer operated and oriented plan in Iowa and Nebraska, has been taken over by regulators because the insurer has insufficient capital, FierceHealthPayer previously reported.

Back in Colorado, the state's CO-OP has actually decreased premiums for many of its plans by nearly 40 percent. That means a 40-year old individual can buy Colorado HealthOP's least expensive silver plan in some areas for about $200 a month, before federal subsidies.

CEO Julia Hutchins told the Times that the CO-OP wanted to "double our enrollment." Colorado HealthOP signed up about 14,000 members last year and has already enrolled about 50,000 members so far this enrollment season, the Times noted.

To learn more:
- read the New York Times article

Related Articles:
What caused Iowa's CoOportunity Health to fall
Colorado, Iowa illustrate rapid rise and fall of CO-OPs
State takes control of Iowa's CoOportunity Health plan over financial concerns
Iowa's CO-OP pulls out of marketplace despite first-year success
Colorado CO-OP shows how nonprofit insurers are disrupting markets