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Small Group Health Insurance Renewals by Geographic Area Executive Summary February 2013

The following charts reflect the range of increases in health insurance premiums received by small employers from data provided by the carriers. The first chart compares 1st quarter data only from year to year, including 2011, 2012 and 2013. The second chart shows similar data as the first chart but includes 4th quarter data grouped with 1st quarter data for better credibility. The final chart gives a geographic comparison for 1st quarter 2013 renewals. This information is intended to illustrate the immediate impact of PL 90 on small group health premiums. PL 90 allows geographic rate adjustments to be made without the previous limit on the combined adjustments for age and area beginning with the October 2011 renewals. The 4th quarter of 2010 and the 1st, 2nd and 3rd quarters of 2011 are pre-PL 90 while the data from the 4th quarter of 2011 and subsequent are all post-PL 90.

Rate increases also vary significantly among different groups for reasons unrelated to PL 90. Employers whose circumstances change may see larger increases because of factors other than those associated with their geographic area. For instance, if a business downsizes, a larger group size adjustment may apply. A decrease from three to two employees can increase rates by 25% to 39% in addition to the normal increase. If a younger employee is replaced by an older one or if one or more employees age into a higher age band, the age factor will cause an increase.1 Two or more of these events can combine to result in significant rate increases. Average base rate increases each quarter also vary for each carrier depending on the experience of the business and expected trends. We have attempted to gauge the impact of PL 90 by tracking and comparing the increases from quarter to quarter.

The last chart does show some geographic differences in rate renewal increases received by small groups. The South and West regions saw the greatest percentages of rate decreases (19.3% and 17.4%, respectively) while the Central region had the greatest percentage of rate increases from 0-20%. Increases of 60% and greater were fairly similar among the geographic areas. The North region saw less decreases and increases from 0-20% than any other region. They also saw more increases from 20-60% than any other region. Additionally, the quarterly and grouped quarterly comparison charts both show a decrease in the aggregate number of renewals. Decreases in the aggregate number of renewals have been influenced, in part, by the loss of micro groups because membership losses have been skewed toward the micro groups. Significant increases combined with economic factors and changing group sizes have contributed to the decline in renewals.

Effective for renewals beginning October 1, 2012 PL 638 requires rate factors due to age and group size combined to be limited to 2.5:1.

1|Page Maine Bureau of Insurance February 2013

Aggregate Number of Groups By Quarter in Each Rate Change Band Size of rate increase:
1st Quarter 2011 1st Quarter 2012 1st Quarter 2013 < 0% (rate decrease) 112 348 479 0-20% 1774 1911 1543 20-40% 1126 709 884 40-60% 146 221 142 6080% 44 61 39 80100% 18 20 18 > 100% 11 11 3 Total 3231 3281 3108

The percentage of rate decreases went up over the three 4 th quarter comparison periods, from 3.5% in 2011 to 10.6% in 2012 and to 15.4% in 2013. The total number of 1st quarter small group renewals remained similar from 2011 to 2012, but dropped by 173 groups from 2012 to 2013 (3281 and 3108, respectively). The 40-100% rate change bands all saw a slight increase from 2011 to 2012 followed by a slight decrease from 2012 to 2|Page

Maine Bureau of Insurance February 2013

2013.

3|Page Maine Bureau of Insurance February 2013

Percentag eof GroupsB y Quarter in Each Rate Chang eB and Aetna, H PH C, and AnthemCom bined
60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% <0% (rate decrease) 3.3% 10.2% 16.2%

0-20% 55.0% 57.0% 51.0%

20-40% 34.1% 22.8% 27.1%

40-60% 5.0% 6.7% 4.0%

60-80% 1.6% 2.2% 1.3%

80-100% 0.7% 0.8% 0.4%

>100% 0.4% 0.3% 0.1%

s p u G f o g a t n c r e P
4th Q '10 & 1st Q '11 4th Q '11 & 1st Q '12 4th Q '12 & 1st Q '13

Ag g reg ate Num ber of Groups B y Quarter in Each R ate C hang eB and
%(ra te decrea se) S ize of rate increas e: <0 4 thQ'1 0& 1 st Q'1 1 4 thQ'1 1& 1 st Q'1 2 4 thQ'1 2& 1 st Q'1 3

168 532 772

0 -2 0 % 2836 2985 2437

2 0 -4 0 % 1759 1196 1294

4 0 -6 0 % 259 352 191

6 0 -8 0 % 82 116 61

8 0 -1 0 0 % 34 41 19

>1 0 0 % 21 16 4

T ota l 5159 5238 4778

The percentage of rate decreases went up over the three comparison periods (3.3%, 10.2% and 16.2%, respectively). The total number of small group renewals remained similar from the 4th Q '10 & 1st Q '11 period to the 4th Q '11 & 1st Q '12 period, but dropped by 460 groups from the 4th Q '11 & 1st Q '12 period to the 4th Q '12 & 1st Q '13 period (5238 and 4778, respectively).

4|Page Maine Bureau of Insurance February 2013

Counts by Geographic Area:

Size of rate increase:


Central East North South West Totals

< 0% (rate decrease) 81 46 27 300 25 479

0-20% 293 214 144 815 77 1543

20-40% 138 182 183 344 37 884

40-60% 25 21 28 65 3 142

60-80% 4 8 4 22 1 39

80-100% 2 6 2 7 1 18

> 100% 0 1 0 2 0 3

Total 543 478 388 1555 144 3108

Central Androscoggin, Kennebec, Sagadahoc

East Knox, Hancock, Lincoln, Waldo, Washington

North Aroostook, Penobscot, Piscataquis

South Cumberland, York

West Franklin, Oxford, Somerset

5|Page Maine Bureau of Insurance February 2013