With the second season of public exchange open enrollment in full swing, it is now possible to analyze changes in plan costs from year to year. Of all the plans on the public exchange, the one with the biggest effect on the rest of the market is the second-lowest cost Silver plan in each rating area. This plan is used as a benchmark to calculate the amount of premium subsidy available to eligible individuals who enroll in this and all other plans on the public exchange. If the price of this benchmark plan rises, subsidy-eligible consumers will receive a larger credit that will make their plan of choice more affordable. Conversely, if the price of the benchmark plan falls, their subsidy will shrink and they may have more difficulty affording their monthly premium.
In some states, including Illinois, Consumer-Operated and Oriented Plans (CO-OPs) are cutting their 2015 exchange rates and earning the status as the local benchmark Silver plan. This development has been met with a range of reactions. Many consumers welcome the lower rates, while other insurance companies complain that the CO-OPs are competing unfairly by lowering their premiums to gain market share. Some consumer advocates are concerned, however, that the decrease in benchmark plan rates will effectively reduce consumer choice by making it more difficult for low-income individuals to afford plans offered by carriers that did not price their products as aggressively as the CO-OPs.
This scenario is not playing out as dramatically in Southeastern Wisconsin as it is across the border in Illinois. In the five-county Milwaukee metro area, the benchmark Silver plan rates increased modestly from 2014-2015, by an average of 4.4%. The average price of all Silver plan options in these counties increased more sharply, at 10.6%. Therefore, while the price of the benchmark plans in Southeastern Wisconsin are not tracking at the same rate as other Silver-level plans, eligible exchange consumers will still see an increase in their 2015 subsidy due to the increase in the cost of the benchmark plan.
Moreover, the carrier offering the benchmark plan did not change in four of the five counties analyzed in Southeastern Wisconsin. Dean Health plan remained the benchmark carrier in Waukesha County, while the CO-OP Common Ground remained in the benchmark slot in Washington, Ozaukee, and Racine counties. In Milwaukee County, however, the carrier of the 2014 benchmark plan, Anthem Blue Cross and Blue Shield of Wisconsin, was replaced by Common Ground.
To read more about the effect CO-OPs are having in the individual health insurance market, click here.