Insurers are currently preparing their initial rate filings for 2020 right now. Submissions will be due in a few weeks. So what should we expect?
I think we should expect stability as the rule set if fairly constant going from 2019 to 2020. Insurers know that the only major potential policy shock is an adverse ruling from the 5th Circuit and the Supreme Court in Texas v Azar. That is a low probability event. Silver loading is allowed and common. CSR payments are slowly working their way through the court system but there will be no final judgement to trigger regulatory intervention. Essential Health Benefits have not been touched except at the edges. This is a policy stable year. It is the first policy stable year since 2016 policy year pricing season.
For the 2017 policy year, actuaries were trying to adjust to the loss of federal reinsurance and the Presidential election.
For the 2018 policy year, actuaries were trying to price in the possibility of repeal and replace as well as CSR termination.
For the 2019 policy year, actuaries were trying to estimate if they had overpriced 2018 and estimate the impact of Silverloading as well as mandate repeal.
For 2020, there is clarity about the bigger questions from 2019 but no new policy curve balls.
I expect more individual market insurers to enter new markets and expand their footprints.
Here are the major pricing pressures for the actuaries to worry about.
- General medical trend (5% to 10%)
- Health Insurance tax (3%)
- Changes in risk pool due to individual mandate repeal (0% to ???)
- Changes in risk pool due to low cost plans being available (0% to -???%)
- Short term limited duration and Association Health Plans (0% to ???)
This will vary by state. States that publicize individual mandates will see healthier and bigger risk pools than states that either don’t have a state based individual mandate or have a state based individual mandate and absolutely no advertising about it.
States that have filed for 1332 waivers for reinsurance will see less premium pressure than states without reinsurance.
States that fully expand Medicaid to 138% Federal Poverty Level will see lower premium increases than states that have not expanded Medicaid. This will be most evident in Utah, Idaho, Virginia and Maine as the roll-out ramps up.
The short version of this post is that 2020 is the first “normal” operational year for the ACA exchanges over the past several years. We should see “normal” changes to premiums.