Premium Increases in Utah Health Insurance Plans

The recent premium increases have affected all of the different comprehensive health insurance plan types. Over the last nine years, managed care products such as HMO plans increased less than plans with fewer cost controls. The largest increases have been among FFS and PPO plans. However, given their large market share in Utah, HMO and HMO with POS plans have had the most impact on premium trends in the market.

The difference in premium increases between plans appears to be smaller than the general trend in premium increases. HDHP may be an exception, but these represent only 1.9 percent of the comprehensive health insurance market and we have only limited data on these new plans.

Premium increases have been fairly uniform among different group sizes. Significant premium increases occurred in both large and small group plans. Individual plans, in comparison, have experienced relatively lower increases over time; however, this pattern changed during 2004 with individual plans reporting a much larger increase than in the past (see Figure 3). As mentioned previously, the cost differences between individual and group products are probably due to differences in underwriting practices (see "Comprehensive Market by Group Size" for further discussion).

Increases in large group plan premiums have had the most impact on the premium trends in the market over the last nine years. This is primarily because, at least in the comprehensive health insurance market, more Utah residents are covered by large group plans than by any other type. As a result, changes in this category have a larger impact on market averages than changes in the individual or small group markets.

Although Utah has continued to experience significant increases in the cost of comprehensive health insurance coverage, when one compares Utah premiums on a per member per month basis to national data from the National Association of Insurance Commissioners (NAIC), Utah's premium appears to be lower than the national average. For example, during 2007, the average premium for Utah's comprehensive health insurers was approximately $204 per member per month. In contrast, the average premium for commercial health insurers reporting comprehensive health insurance to the NAIC financial database was approximately $259 per member per month. Although this comparison does not control for differences in benefits, health status, or demographics, this data suggests that Utah's average premium is lower than the average premium reported to the NAIC.

However, the premiums that consumers actually pay may differ significantly from the market average depending on their individual circumstances. Furthermore, although Utah's premiums may be lower by this measure, Utah's premiums are increasing at rates that are very similar to comprehensive insurers nationally (9.2 percent for Utah, 9.1 percent for comprehensive insurers reporting to the NAIC).

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