Insurance Commissioner moves to stabilize the individual health insurance market

Friday, March 30, 2018

From the Office of the Insurance Commissioner

Insurance Commissioner Mike Kreidler recently approved a new regulation to help stabilize the individual health insurance market by increasing the number of geographic areas an insurer can use to set rates.

Insurers are allowed to vary how much they charge their enrollees depending on provider reimbursement costs in different parts of the state. Previously, Washington was divided into five rating areas. The new rule increases the number of rating areas to nine. Each area is assigned a rating factor based on provider reimbursement costs. This is just one of the factors insurers can use to calculate premiums for enrollees who live in that geographic area.

“By increasing the number of rating areas, we can more accurately reflect the experience of the insurers in our market and provide incentives for them to offer coverage in more parts of the state, especially in our rural areas,” Kreidler said.

To protect consumers from excessive differences in premiums from one part of the state to another, Washington is one of a few states that caps the allowable difference in premiums. The new rule gives insurers willing to offer individual health insurance coverage in most or all of the counties in the state somewhat greater latitude in setting their premiums.

“We anticipate this will encourage insurers to offer individual health insurance in more counties,” Kreidler said.

How much someone pays for their health plan depends on a number of factors, including:
  • Their age, 
  • How many people are covered, 
  • Whether or not they smoke, 
  • Where they live; and 
  • The type of plan they choose. 
“More than 300,000 people in Washington state buy their health insurance in the individual market and they’ve faced tremendous uncertainty this year because of deliberate actions by the federal government,” said Kreidler. 
“Now they’re facing premium increases as well as limited plan choices - especially in rural parts of the state. Expanding the number of rating areas in our state is just one step we can take to help stabilize this market for consumers.”

Kreidler proposed legislation this year to create a state-based reinsurance program for the individual market similar to the federal reinsurance program in place under the Affordable Care Act from 2014-16. Kreidler’s proposal would have lowered premium increases by up to 10 percent. The Legislature supported the proposal but could not reach agreement on a funding source.

“I’m committed to using every tool we have to stabilize the individual health insurance market – including proposing a reinsurance program again,” Kreidler said. 
“But in the meantime, we must look at every opportunity we have to improve this market. Now that the Trump administration and Congress have failed to help consumers, it’s up to the states to take the lead.”

In light of the new rule, one insurer – Premera Blue Cross – has already committed to cover any potential “bare” county in 2019.


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