Early Rate Filings Show Premium Increases, Rising Costs of Care

The Centers for Medicare & Medicaid Services (CMS) has published proposed fee modifications for 2024 Marketplace plans. In some states, insurers submitted fee requests earlier in the summertime, alongside justifications for the proposed modifications to subsequent 12 months’s premiums. These filings reveal tendencies in underlying well being care prices and client habits, in addition to illuminating previous and projected results of state and federal reforms on market dynamics. CHIR dug into the speed requests* from choose states with early fee submitting deadlines—the District of Columbia (DC), Maryland, Oregon, Vermont, and Washington—to see what’s behind the premiums customers may very well be dealing with in 2024, each on- and off-Marketplace.

Most Insurers Asked to Increase Rates

The overwhelming majority of insurers in our pattern are looking for increased premiums for his or her particular person market plans. In these 5 states, premium requests for plan 12 months 2024 ranged from a median 3.4 % lower to a median 18.5 % enhance (see desk).

Table. Average Proposed Individual Market Rate Changes in Select States (Plan Year 2024)

Source: particular person market fee submitting summaries revealed by DC, Maryland, Oregon, and Washington, and writer’s assessment of Vermont fee filings, for plan 12 months 2024.*

Insurers justified proposed will increase by citing various contributing components, together with rising care prices, client utilization patterns, revenue margins, threat adjustment expectations, and unfavorable claims expertise. Filings additionally confirmed fascinating, if not blended outcomes for the impression of some state and federal insurance policies, in addition to the consequences of the pandemic. Some of those themes are explored additional beneath.

Always On-Trend

Trend—the mixture of modifications to well being care prices and enrollee utilization patterns—continues to be a main driver of proposed fee hikes. For instance, pattern accounts for almost two-thirds of Blue Cross Blue Shield of Vermont’s proposed 15.5 % fee enhance and virtually 80 % of the 9.9 % enhance requested by CareFirst’s PPO line of enterprise in DC. Insurers incessantly attributed pattern will increase to the rising value of medical companies and prescription drugs. However, projected will increase in utilization, corresponding to increased pharmacy profit use, nonetheless contributed to proposed fee will increase.

Some filings illustrated the impression of insurer contracting practices on value, and in the end pattern and premiums. In Washington State, Premera Blue Cross detailed how well being techniques that account for the overwhelming majority of claims are asking for giant will increase in reimbursement—some within the double digits—and “have shown a willingness to allow our contracts to expire” in the event that they don’t get the reimbursement ranges they demand. The fee submitting additionally states that “limited competition and regional monopolies” contributes to increased prices. Also in Washington State, Coordinated Care broke down modifications in well being care prices by community, indicating that the impression of unit prices on premiums is decrease for the community serving enrollees in its public option-style plan providing—which is topic to state limitations on supplier reimbursements—than within the insurer’s different plan community within the state.

Compared to Prior Years, COVID-19 is a Bit Player

COVID-19 continues to play a task in insurers’ fee filings, albeit a smaller one. Unlike prior years’ early fee proposals, the impression of the COVID-19 pandemic was not prominently featured in insurers’ 2024 filings. Many insurers within the reviewed filings didn’t point out the pandemic in any respect. Some filings indicated that pandemic-related uncertainties and abnormalities prompted modifications to their historic expertise (which informs their 2024 fee requests), however didn’t recommend that COVID-19 could be a price driver subsequent 12 months. Insurers that predicted an impression from COVID-19 projected solely a small impact on premiums, typically stemming from modifications because of the expiration of the federal pandemic-related public well being emergency. These insurers sometimes both elevated charges based mostly on anticipated will increase in the price of vaccines for payers, because of the removing of federal manufacturing subsidies, or decreased charges due to COVID-19 protection insurance policies which have expired, such because the requirement to cowl testing with out value sharing. In Washington State, Molina’s submitting advised that these two dynamics would offset one another. Kaiser Foundation Health Plan of Washington described an expectation that utilization would enhance in 2023 and 2024 “as the impact of COVID-19 continues to wear off.”

Some insurers did predict some lasting, secondary impacts of the pandemic. Oregon regulators particularly requested insurers about how utilization behaviors have modified with customers switching again to in-person care as COVID-19 circumstances dropped. Several insurers talked about the continued reputation of telehealth, however some famous that they haven’t seen preventive service use return to pre-pandemic ranges.

The Impact of Medicaid Redeterminations is Unclear

April marked the top of a federal coverage permitting Medicaid enrollees with modifications in program eligibility to stay enrolled. States have begun the method of Medicaid redeterminations, or “unwinding” this steady protection coverage, and hundreds of thousands of individuals have already misplaced their medical insurance. While many folks shedding Medicaid might be eligible for backed Marketplace protection, that transition doesn’t seem to have an effect on proposed charges in these 5 states although the transition course of is anticipated to lengthen into 2024.

In Maryland and DC filings, CareFirst explicitly excluded the premium impression of the unwinding, reserving the best to vary its proposal in the course of the assessment course of to account for the consequences of Medicaid redeterminations. In Providence Health Plan’s submitting in Washington State, actuaries famous that, along with an expectation that the insurer wouldn’t obtain enrollees from this inhabitants, they lacked “any quantitative evidence that supports a change in [Providence Health Plan] premium rates would be warranted.” Community Health Plan of Washington’s submitting mentioned the unwinding’s impression on the danger pool was “immaterial” to their fee proposal.

However, some filings predict modest modifications to membership or morbidity based mostly on redeterminations. For instance, in Oregon, BridgeSpan indicated that Medicaid enrollees transitioning to the Marketplace in the course of the unwinding could be comparatively sicker. On the opposite hand, Blue Cross Blue Shield of Vermont, which predicted a further 1,609 new enrollees by the start of 2024 as a result of Medicaid redeterminations, advised these new members wouldn’t impression the insurer’s threat rating.

Reinsurance Remains Reassuring

Filings present that state reinsurance packages proceed to carry down insurers’ premium requests. Reinsurance packages stop high-cost claims incurred by insurers from driving up premiums by masking a portion of the claims. Several states have established reinsurance packages utilizing a 1332 Waiver below the Affordable Care Act (ACA). In Oregon, insurers submitting particular person charges credited the state’s reinsurance program with holding down premiums. Providence Health Plan, for example, lowered their claims expertise by 8.6 % due to Oregon’s reinsurance program.

State of Play: Insurers Predict the Impact of Washington State’s 1332 Waiver

Washington State requested insurers submitting particular person market fee requests to estimate the impression of the state’s new 1332 Waiver, which is able to broaden entry to Marketplace protection to undocumented residents in 2024. Many insurers submitting charges for 2024 indicated that the Waiver wouldn’t impression their estimated enrollment or collected premiums subsequent 12 months, however others advised that this new pool of Marketplace enrollees would put some downward strain on premiums. For instance, each PacificSource and Kaiser Foundation Health Plan of the Northwest predicted that premiums could be decrease below the Waiver in comparison with premiums with out the Waiver. Coordinated Care indicated the Waiver would enhance membership and reduce total morbidity, leading to decrease charges than a non-Waiver state of affairs. On the opposite hand, Community Health Plan of Washington famous that, whereas enrollment is anticipated to extend considerably below the Waiver, the insurer doesn’t anticipate any premium impression.

Takeaway

While the pandemic and coverage modifications proceed to maintain us on our toes, some market dynamics are steadfast, just like the growing value of American well being care. As pattern continues to drive premium will increase, policymakers are in quest of reforms to enhance transparency and comprise prices. Thankfully, many customers might be largely shielded from premium will increase as a result of expanded federal premium subsidies below the American Rescue Plan Act and Inflation Reduction Act. Still, the fee assessment course of stays an vital device to maintain premium will increase in verify, and shield customers’ entry to reasonably priced, complete medical insurance.

*Author’s observe: assessment of early fee filings was largely restricted to the narratives within the actuarial memoranda that accompany fee filings, which clarify in lay language insurers’ assumptions for the upcoming plan 12 months based mostly on previous expertise and projected modifications. Review was additionally restricted to a set of states that posted fee filings comparatively early in comparison with different states. The findings summarized on this weblog should not essentially generalizable to the broader universe of particular person fee filings for plan 12 months 2024, nor do they mirror the entire components underlying fee requests or variations between insurers submitting particular person market charges on this set of states.