Health Insurance: Stabilized Premiums Despite Nursing A ‘Hangover’

The health insurance industry could experience a COVID-19 “hangover” in 2022, as consumers who put off getting elective treatment during the pandemic return to the doctor.

That was a prediction from PwC’s Health Research Institute, which projected employer medical costs to increase 6.5% in 2022, slightly lower than in 2021 and higher than the period from 2016 to 2020.

Contributing to this increased spending are the consumers who received care that had been deferred during the pandemic, as well as the ongoing costs of treating COVID-19, increased mental health and substance abuse issues, and poor pandemic-era health behaviors.

However, on the individual market, most carriers who participate in the Affordable Care Act marketplaces assumed COVID-19 would have no effect on their 2022 costs, according to rate filings.

Kaiser Family Foundation reported that of the 311 rate filings reviewed, 272 plans had a premium change for 2022. Rate changes from 2021 to 2022 range from a 28.5% decrease to a 25.6% increase, although half fell between a 1.8% decrease and a 6.2% increase.

The four consecutive years of declining premiums on the individual market is good news for consumers, said Matt Eyles, president and CEO of America’s Health Insurance Plans.

“For next year, we anticipate seeing another decline in marketplace plan premiums,” he said. “As we’ve looked at the data, we see the average premium for the typical benchmark silver plan next year will decline by about 3%. And about 80% of individual consumers who are buying coverage on their own should be able to find coverage for $10 or less per month, as a result of the enhanced premium subsidies under the American Rescue Plan.”

Lower premium costs are a sign that the ACA marketplace is moving toward stability after its bumpy early years, he said.

In addition, consumers have more carriers from which to choose in the ACA realm, and some carriers have expanded their coverage areas for 2022.

“I think the story of the individual market is that after several years of trying to figure out what the market would look like, and then some of the changes that we had seen under the past administration, now we continue to see the market mature,” Eyles said. “As more carriers enter the market, some of that, I think, is a reflection that they believe the future is good and it’s the right time to make that investment.”

On the employer side, health insurance and related benefits are more crucial than ever to attract and retain workers as the war for talent heats up in the coming year, he said.

COVID-19 And The New Normal

COVID-19 forced the health insurance industry to adapt, and some of those changes will become more of a norm in the coming year, Eyles said. He pointed to the increasing use of telehealth services as one example.

“We really made such a shift toward virtual care,” he said. “And we know a lot of the in-person care has resumed. But I do think that we’re all trying to figure out, longer term, what’s that balance and mix going to be in-person versus telehealth services. I think the pandemic has shown how important telehealth services were, especially in certain areas, not just to get treatment and diagnosis for acute conditions but for things also like mental health treatments and services.”

The Expansion Of Government Health Care

An increasing number of Americans receive their health care through government-based programs.

Since 2017, the percentage of managed care organization members who receive care through Medicare or Medicaid jumped from 31% to 41%, according to statistics from Florida Blue. Medicaid currently makes up 25% of the MCO membership mix, while Medicare has 16%.

Meanwhile, commercial self-funded insurance makes up the biggest piece of the pie at 43%, although that share decreased from 50% in 2017. Commercial private insurance makes up 16% of the mix, down slightly from 19% in 2017.

President Joe Biden campaigned on a health care platform that would expand Medicaid, lower the Medicare eligibility age and establish a public option. So far, none of these has become reality. But what about in 2022? Eyles was doubtful.

“I think the message is clear that we should build and improve upon what we have, and I think we’re optimistic that people will recognize that’s still the best way to go over the long term,” he said.

But he also said that much of the expansion of government health care could come at the state level. Several states are exploring public options of their own.

Social Determinants Of Health

The terms “health equity” and “social determinants of health” became buzzwords over the past year or so. Health insurers will devote more attention to those factors in the coming year, Eyles said.

“Health insurers are committed to addressing health inequities, and especially the underlying social factors,” he said. “I think that will continue to be important in 2022. We also are focusing on the cost and price of prescription drugs, which take up a big piece of the health premium dollar.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].