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Insurers face uncertainty in setting 2021 premiums

Insurers need to project the future cost of delayed elective procedures and total expenses of COVID-19 care.

Susan Morse, Managing Editor

While health insurers have saved money by the cancellation of elective surgeries, and many are currently refunding excess revenue under the Medical Loss Ratio, premiums for the 2021 plan year are still in question.

There is a lot of uncertainty, America's Health Insurance Plans said. Without comprehensive data, insurers are working to estimate 2021 healthcare costs and must base their rates on projected costs, AHIP explained in an infographic.

It is too soon to know what the real healthcare costs of COVID-19 will be. Also, delayed elective and nonurgent care will likely be delivered – and paid for – later.

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That care could be more complex and costly because it was delayed, AHIP said.

WHY THIS MATTERS

Insurers are working to meet state deadlines to file 2021 premiums in the individual market.

THE LARGER TREND

Federal law requires insurers to spend 80-85 cents of every premium dollar on medical services and care. The rest, under the Medical Loss Ratio, may go towards administrative expenses, regulatory costs, federal and state taxes, customer service, and other expenses.

The COVID-19 pandemic's postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending, which many are refunding now.

ON THE RECORD

"COVID-19 has had a very real impact on the economic, physical, and mental health of millions of Americans," said Jeanette Thornton, senior vice president of product, employer, and commercial policy at AHIP.  "Our members are working through this uncertainty to strengthen access to affordable care as the fight against the coronavirus continues. COVID-19 dramatically changed the healthcare landscape – in 2020 and for years to come.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com