Despite the toll the coronavirus crisis has taken this year on the healthcare system at large, the pandemic has had little effect on premiums that health insurers proposed for Affordable Care Act plans in 2021.
In states that have made rate requests public, commercial health insurers have so far asked regulators for modest increases to premiums in the individual market, making small or no adjustments for costs related to COVID-19. In a few states, insurers said they plan to lower rates.
Insurers in New York, where the pandemic hit early and hard, are the exception, with some companies proposing premium hikes of nearly 20%.
Insurance experts and actuaries, which help insurers set premiums, warned that rates could change once health plans have collected more data on COVID-19 costs and have a better idea of when plan members will decide to go back to the doctor for routine appointments and elective procedures.
Insurers that filed rates starting last month may choose to revise their premiums higher before open enrollment begins in November. Likewise, insurers in states with later rate filing deadlines could hike premiums to a larger degree because they've had more time to analyze trends.
"Almost universally, the (insurers) are saying they may need to amend or revise their filings once they get more data on the impact of COVID-19, so this may be one of those rate filing seasons where nothing is going to be locked in early," said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University. "These early filings are not necessarily indicative of where we are going to end up."
Health insurers set premiums for a given year to reflect both past experience and how they expect healthcare costs, administrative costs, membership and other factors will change. As usual, actuaries said growth in healthcare costs is likely to be the chief driver of premium increases. That figure reflects changes in the prices that healthcare providers charge for their services and how frequently insurance plan members use those services.
Unknowns about COVID-19 have thrown a wrench into the rate-setting process. Unanswered questions such as how long the pandemic will last, how severe and costly the cases will be, and when patients will return to doctor's offices and hospitals make it difficult for insurers to determine premiums with confidence.
Insurers are also grappling with whether to adjust premiums to include the cost of a COVID-19 vaccine should one become available next year. They are modeling various scenarios for how their membership could change as a result of high unemployment. They are also wondering if they will be forced to pay for widespread coronavirus and antibody testing.
"The testing could be kind of a long tail. If we're spending a lot of money on testing, and we're not deferring a lot of care anymore, that's where you could imagine it kind of raising costs a little bit, but how much depends on who really pays for it and what are the unit costs," said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation.
Dave Dillon, a fellow at the Society of Actuaries, estimated an average 7% rate increase in the individual market across eight states for which he has seen data. There are hints, he said, that insurers filing rates in states with later deadlines may set them even higher, given the pandemic hasn't significantly slowed down and there's growing uncertainty over how long routine medical care will remain deferred.
"More and more people are thinking deferred costs will go into 2021 than previously thought," he said.
Even so, insurers in most states that have publicly posted rates have filed for premium decreases or increases of less than 10%. Maryland insurers proposed a rate decrease of 4.8% on average in the individual market. Just one insurer adjusted costs due to COVID-19, citing uncertainty, according to the state's insurance administration.
Maine's three insurers pitched rate changes ranging from a decrease of 10.2% to an increase of 0.4%. One insurer adjusted rates downward for COVID-19, explaining that it assumed plan members would continue to delay care in 2021 because of a second wave of infections.
Vermont's two insurers asked for rate increases ranging from 6.3% to 7.3%. And in Oregon, insurers proposed a rate increase of 2.2% on average. One insurer tweaked rates by less than 1% for COVID-19, saying it intends to update its assumptions as it gets more experience.
A spokesman for Kaiser Foundation Health Plan of the Northwest, which filed for a 3.5% rate decrease in Oregon, did not adjust rates for COVID-19. A spokeswoman acknowledged that the rate request is subject to change during review, but said "while significant uncertainty remains on utilization for the rest of 2020, we do not anticipate changing our rates for 2021 at this time."
In Washington state, health insurers asked for an average rate decrease of 1.8%. Just one insurer chose to increase rates due to the coronavirus. A spokesperson for the Washington insurance commissioner said health plans would be allowed to revise their rates during the review period if they have new information on COVID-19 that they didn't have before.
Health insurers have only two months of data to help them decipher all the unknowns about COVID-19, said Karan Rustagi, a senior consulting actuary at Wakely. That's likely one reason why rate increases filed so far have been relatively low.
Insurers may be waiting until they have solid data before they adjust rates for coronavirus, he said. It takes four to six months for an insurer to get a complete picture of one month of claims. Insurers now have claims data for February and some for March, but the pandemic's effects on healthcare utilization have already changed since then.
"We're all looking at our data and it's not credible," he said. "It's too soon to know."
On the flip side, Rustagi said insurers may choose to keep rates lower in 2021 because they are profiting this year. The benefit of lower costs due to deferred medical services has so far outweighed costs related to coronavirus tests and hospitalizations. Keeping rates relatively lower could reduce the rebates insurers may be required to pay in the future under an ACA rule that requires them to spend a certain percentage on medical care, he said.
Doug Norris, an actuary at consulting firm Milliman, said it's also possible that state insurance regulators could put pressure on insurers to keep rate increases low because insurers have incurred lower claims so far this year.
He said he expects wider variation in rates between states and within local markets as insurers make their own assumptions about how costs will change: "It's not a group exercise," he said. "You can't compare notes with everybody else and get a consensus on it."
Rate filings haven't been low everywhere. Some health insurers in New York filed rates substantially higher than insurers in other states. While the average rate increase in the state's individual market was 11.7%, Oscar Health asked to hike rates by 19.1% on average. Fidelis Care pitched an 18.8% average increase in rates, hiking them 8.4% to reflect COVID-19 costs.
Fidelis is owned by ACA marketplace and Medicaid giant Centene Corp., which suggested in April that it expects to profit from the pandemic as people who lose job-based insurance turn to Medicaid for coverage. The company last week raised its earnings guidance.
"Each year, we take a variety of factors into account when developing and pricing our products. We continuously monitor our experience in New York and take appropriate rate actions each year that align with local market factors," a Centene spokeswoman said, adding that the insurer's premiums must be filed and approved with regulators.
Oscar Health did not respond to requests for comment.