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Marketplace Insurance Premiums Projected To Drop 2 Percent

LITTLE ROCK — Insurance policies sold through the Arkansas Health Insurance Marketplace are projected to see a net aggregate decrease of 2 percent in premium costs for 2015, Gov. Mike Beebe’s office announced Tuesday.

Beebe’s office said the projection includes policies offered through the so-called private option, which uses federal Medicaid money to subsidize private health insurance for Arkansans earning up to 138 percent of the federal poverty level. Premiums under the private option are projected to decrease slightly but remain essentially flat.

“Nationwide, insurance costs historically rise by 6 to 10 percent annually,” the governor’s office said in a news release.

Beebe’s office said it released the projection from the state Insurance Department because inaccurate information had been inadvertently posted on a state Insurance Department website.

Final rates will not be released until after the plans are certified by the U.S. Department of Health and Human Services, which will happen before open enrollment for 2015 begins Nov. 15.

Officials said the private option appears to be having a positive impact on insurance sold outside that program through the marketplace, or exchange.

“The private option creates a larger pool of consumers, it helps add stability to the marketplace as a whole, and the private option includes also more of a younger consumer base,” said Insurance Department spokesman Seth Blomeley. “When you have a younger consumer base, it brings the overall premiums for the whole marketplace down.”

Out of 182,210 Arkansans who have been found eligible for the private option so far, 66 percent are between ages 19 and 44, according to the state Department of Human Services.

“We see that the private option is having a positive effect,” said DHS spokeswoman Amy Webb. “Typically rates rise, and that’s not happening in this situation.”

“It’s big news,” said Sen. David Sanders, R-Little Rock, one of the architects of the private option. “While most of the states around the country are looking at anywhere from high single digits to double-digit increases in their exchange rates, obviously Arkansas is bucking the trend.”

Sen. Bryan King, R-Green Forest, an opponent of the private option, said the projections are “just projections.”

“We need to wait and see what happens,” he said. “Just like the P.O. — they came out and said it was going to cost this much, and they’re over budget. Until you get the bill, you don’t know what it’s going to cost.”

King and other critics of the private option have complained that monthly per-person costs have been exceeding the federal target, which for 2014 is $477.63 per person, per month. For this month the average cost is $484.92 per person, a decrease from the April high of $490.42.

Arkansas must not exceed the cap — which will increase in 2015 and again in 2016 — for the program’s first three years or it will be on the hook for the difference.

Webb said officials are hopeful that a combination of factors will put the state on target. Those factors include the medical loss ratio, or the requirement that insurance companies spend at least 80 percent of premiums each year on medical care or rebate the excess premiums to the customer, which in this case is the state; and the possible savings the state could see if the entire amount set aside for cost-sharing is not needed.

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