The American Academy of Actuaries (the Academy) published a public policy issue brief outlining a convergence of multiple factors, including inflation and the aftermath of the COVID-19 pandemic, that could affect 2024 health insurance premiums.
According to the Academy, rate changes vary between individual and small group plans within the same geographic area. There may also be variations between regions. However, rate changes for 2024 Affordable Care Act (ACA)-compliant health insurance plans are driven by the following:
- Inflation—Healthcare costs have outpaced inflation. Higher contract reimbursement rates with providers pressure premium rates. These growth in these costs have been exceeding the rate of inflation, and renewals of expiring multiyear contracts setting reimbursement rates are expected to reflect providers’ increased operational costs.
- COVID-19 Public Health Emergency (PHE)—With the end of the PHE, payment responsibility (for COVID-19 vaccines and tests) and plan enrollment may change, possibly leading to carriers increasing their rates. Furthermore, the impact of long COVID-19 on medical costs and premiums is uncertain.
- Coverage Shifts—Many small employers are changing coverage options, which could result in higher premium rates in ACA-compliant small group plans. These employers are migrating toward alternative funding arrangements, such as level-funded plans and self-funded plans.
- Medicaid Redeterminations—Medicaid eligibility redeterminations will likely increase enrollment in the individual health insurance marketplace, although the impact on premiums is still unknown.
- Telemedicine—Although use of telemedicine has recently dropped, usage remains above pre-pandemic levels. While some federal policies to broaden telemedicine access have been extended, others haven’t. Employers are urged to consider changes that may occur at a state or federal level, as it remains uncertain whether telemedicine reduces traditional health service utilization or increases overall spending.
The Academy noted that higher healthcare and provider costs are putting pressure on premium rates for next year—maybe even more so than when current premium rates were developed in 2022.
What’s Next and How RMC Can Help!
When developing 2024 health insurance rates, carriers are likely to project claims under multiple scenarios due to the uncertainty of various factors, including Medicaid redeterminations. However, inflation, among other forces, will increase negotiated provider payment rates and premiums. Premium changes for 2024 will reflect local market dynamics and vary by carrier and area. Employers should continue to monitor healthcare utilization and spending trends.
When it comes to health insurance, we understand that one size does not fit all. At RMC, we offer a range of alternatives to traditional health insurance to suit your unique needs and budget. Our options include funding alternatives, reference-based pricing, pharmacy benefit management, and many others. These alternatives can provide you with more flexibility and cost-effective solutions for your healthcare coverage. To explore these options in more detail, contact us today at 239-298-8210 or health@rmcgp.com.
The article is of general interest and is not intended to apply to specific circumstances. It should not be regarded as legal advice and not be relied upon as such. In relation to any problem which they may have, readers are advised to seek specific advice. © 2023 Zywave, Inc. All rights reserved.
