With 2019 at the half-way-point, businesses are beginning to plan for 2020. And with that comes the possibility of ACA health plan premium increases. But according to a new brief issued by the American Academy of Actuaries, plan premiums could be all over the place for a variety of reasons.
The top factor that will likely impact premiums: continued growth in health care costs. The medical trend is projected to be consistent with that for 2019, which ranged from about 5 percent to 8 percent.
“Although the growth in spending for specialty drugs is expected to remain high, spending growth for prescription drugs overall has leveled off and is expected to be similar to or slightly higher than medical spending growth,” the authors write.
Another key factor: if healthier individuals and groups opt for now available short-term limited duration insurance and association health plans, which could then drive up premiums for ACA plans. This could increase in 2020 when employers will be able to offer workers health reimbursement arrangements to buy
“The impact of these rules on the individual market will depend on how effectively the guardrails prevent employers from transferring their most expensive employees to the individual market,” the authors write. “An influx to the individual market of a balanced cohort of workers could help stabilize the individual market. However, if employers with less-healthy workers shift to offering individual market HRAs, the premiums in the individual market will increase.”
Other key factors shaping 2020 individual market premiums include:
- The possibility of issuers incorporating extra conservatism in their premiums based on uncertainties regarding expected risk adjustment transfers.
- Adjustments to assumptions used to build the cost of cost-sharing reduction subsidies into premiums.
- State actions to implement reinsurance programs, impose individual mandate penalties, or enact rules that would facilitate or prohibit the availability of alternative coverage options.
- The reinstatement of the health insurance provider fee.
And there are other drivers too. None of this stuff is simple, but luckily, YOU have my team of health insurance and employee benefits experts to answer your questions and help you not only understand all of this, but rule it. Contact us with any questions about your plans!