Kilpatrick

Industry News

2014 Individual Market Data Compared to 2013

CMS recently published health insurer experience data for the 2014 calendar year—the first year of ACA’s major market reforms. We analyzed the Texas individual health market data for 2014 and compared it against the data from 2013.

2013 2014 % change
Premium per Member/Month $223 $274 +23%
Claims per Member/Month $172 $321 +86%
Loss Ratio (before Premium Stabilization) 77% 117% +52%
Policyholders 411,568 715,835 +74%
Covered Members 737,002 1,190,280 +62%
Non-Income Taxes/Fees (% of Premium) 2.1% 6.5% +209%
Internal Sales Costs (% of Premium) 0.8% 0.9% +13%
Broker Compensation (% of Premium) 5.7% 3.8% -33%

The individual market in Texas grew by 62% in 2014. The claim costs and carrier losses skyrocketed and so did insurance-related premium and ACA-related taxes. The percentage of premium paid to brokers as compensation fell, which was mostly due to customers purchasing plans without brokers (think exchange purchases with a subsidy). The claims and loss ratio in the table above exclude the impact of the three ACA premium stabilization mechanisms for the 2014 experience. The table below illustrates the impact of those programs on the 2014 claim expenses reported above.

Transitional Reinsurance -$52.70
Risk Adjustment -$23.06
Premium Stabilization Total -$75.76
% Impact to Claims Expense -23.6%
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