Why Delaware’s Health-Care Premiums Have Increased by 100%

The evidence of insurance premiums spiking under the Affordable Care Act continues to mount, with new research from Morgan Stanley showing the highest increases in the individual and group markets in years.

Morgan Stanley’s (NYSE:MS) health-care analysts conducted a proprietary survey of 148 brokers and found the average increases in the small group market are above 11%, and 12% in the individual market. What’s more, certain states are experiencing premiums five to 10 times higher than last year’s prices. In Delaware,  premiums are up by 100% on average while New Hampshire prices were 94% higher.

It’s not yet clear how high premiums will increase in 2015, but Department of Health and Human Services Secretary Kathleen Sebelius admitted in Congressional testimony last month that they would increase, and some analysts are projecting double-digit hikes next year.

The average premium for a mid-tier silver plan in 2014 was $328 per month without government assistance. Subsidies are available for those making up to 400% of the federal poverty level, which is about $45,00 for an individual and $94,000 for a family of four.

The ACA mandates that every individual in the country have insurance by the end of open enrollment period, which passed on March 31, or they will face a fine of $95 a year or 1% of their annual income for failing to comply. The White House granted an extension until April 15 for those still struggling to enroll by the deadline.

Morgan Stanley’s report points to different elements of the president’s signature reform for driving up premiums, including comprehensive coverage benefits and tighter restrictions on premium ratios of what young and healthy people can be charged versus older and sicker people.

But Larry Kocot, Brookings Institution visiting scholar, says the waters are still murky, and that Morgan Stanley’s insights only emphasize the confusion as premiums, while rising nationwide, always vary greatly by state.

“It’s difficult to determine what insurers will do in setting premiums for next year.  There is not much exchange enrollee experience from this year to take into consideration in setting premiums for next year,” Kocot says.

Kocot pointed out that some states had only one broker respond to the Morgan Stanley survey so the results may not be reliable from that survey sample," he says.

“One take away from this is that every state will be different, and it depends on the experience of the insurer in that state,” he says. "Limited competition in some states could be driving some increases, but it depends on many factors.”

So far, the White House reports 7.1 million Americans have selected plans on both state and federal exchanges, and Sibelius has estimated that between 80% and 90% of enrollees have paid their first month’s premiums. The insurance industry typically considers individuals enrolled when they makes that first month’s premium payment.

The RAND Corporation released a report Tuesday estimating that there was a net gain of 9.3 million people in the number of Americans newly-covered by insurance from September 2013 through mid-March 2014, with the largest gain coming from those who gained employer-sponsored health insurance (8.2 million).

RAND estimates that of those 8.2 million , 7.2 million were previously uninsured, and that a large majority of this group came from employer-sponsored plans and Medicaid coverage.

The survey reports 3.9 million people enrolled in marketplace plans and 1.4 million of these people were previously without coverage. The research organization also says its enrollment stats are lower than those released from HHS because it does not include the enrollment surge that took place at the end of open enrollment period.