Academy: Possible Expiration of Pandemic-Era Measures Among Drivers of 2023 Health Insurance Premium Changes
WASHINGTON—The American Academy of Actuaries has released a public policy issue brief that points to the possible expiration of two signature pandemic-era measures that boosted health insurance affordability and coverage as among the drivers of potential premium changes for individual and small group plans in 2023.
“Proposed health insurance premium rates reflect many factors, which can include the effects of legislative and regulatory changes,” said Academy Senior Health Fellow Cori Uccello. “This is especially true for 2023 rates, due to the possible expiration later this year of enhanced Affordable Care Act (ACA) premium subsidies and of a key support of Medicaid coverage during the pandemic.”
The issue brief, developed by the Academy’s Individual and Small Group Markets Committee, Drivers of 2023 Health Insurance Premium Changes, discusses these key factors and others that may account for differences in premium rates being filed with state insurance departments this year for 2023, compared to 2022 rates. The factors are illustrated in a new infographic as well.
The American Rescue Plan Act of 2021 (ARPA) increased advanced ACA premium tax credits in 2020 and 2021 for all eligible income brackets, including extending tax credits to those who earn over 400% of the federal poverty level. These subsidies, which make plans more affordable, are set to end with the expiration of ARPA on Jan. 1, 2023, reversing enrollment gains and possibly worsening plan risk pools.
Provisions in the Families First Coronavirus Response Act (FFCRA) increased federal fiscal aid to states for covering Medicaid enrollees during the pandemic-related Public Health Emergency (PHE), contingent on the states suspending their usual processes for redetermining eligibility for Medicaid coverage. These provisions are set to expire at the end of the quarter in which the PHE is not renewed, which could happen this year. In that event, states could restart the usual redetermination process, meaning some individuals who received Medicaid coverage during the pandemic could no longer be eligible for Medicaid and shift to the individual market, the employer group markets, or become uninsured—a shift that could affect risk pools in the individual and small groups markets.
Other factors expected to drive premium rate changes for 2023 include changes to the composition of the small group market due to the continued shift of small employers to self-funded, level-funded, or other risk-rated coverage, or otherwise leaving the market; changes in utilization patterns for telehealth visits and for mental health care; and changes in provider contracting including the expected impacts of medical inflation. The costs of preventing, testing for, and treating COVID-19, while expected to stabilize, could also be important factors for certain health insurance plans, depending on projected trends in the pandemic, particularly should a new variant emerge that is not mitigated by the immunity provided by prior infections or vaccinations. State-level measures such as reinsurance programs aimed at lowering premiums could also reduce premiums, with an outsized reduction in the first year of new reinsurance programs.
Learn more about the Academy’s health policy work under the public policy tab at actuary.org.
The American Academy of Actuaries is a 19,500+ member professional association whose mission is to serve the public and the U.S. actuarial profession. For more than 50 years, the Academy has assisted public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.