Small Group Health Insurance Renewals by Geographic Area
Executive Summary
September 2012

The following charts reflect the range of increases in health insurance premiums received by small employers by geographic area for 4th quarter 2010 through 3rd quarter 2011 renewals compared to 4th quarter 2011 through 3rd quarter 2012 renewals from data provided by the carriers.  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.  Although this analysis focuses on geographic area, PL 90 also expanded the allowable rating variations for age.  

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*.  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 comparing the increases this year to those in the prior year. 

The charts do show some geographic differences in rate renewal increases received by small groups.  There have been rate decreases in the past, but for the 12 months after implementing PL 90 11.4% of renewals reflect decreases compared to 3.5% before PL 90.  Also, while the distribution of increases and decreases in past years show no little variation by geographic area, this year, the proportion of small employers receiving rate decreases was higher in the southern part of the state (Cumberland and York) and the proportion receiving increases larger than 40% was higher in the northern part of the state (Aroostook, Penobscot, and Piscataquis) and in the eastern part of the state (Knox, Lincoln, Waldo, Hancock, and Washington).

*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.

• The South and Central regions saw the greatest percentages of rate decreases (17.7% and 6.6%, respectively) and 0-20% increases (62.8% and 56.5%).
• The North, East and West regions had the greatest percentages in the 20-60% rate change band (50.2%, 47.3% and 38.3% respectively).
• The East and North regions had the greatest percentages in the 60%-100% rate change band (7.6% and 5.8% respectively).