Open enrollment is going to be interesting in 2020. As carriers start ramping up for policy renewals, they will be introducing a variety of changes brought about by the COVID-19 pandemic. Some of those changes will be positive, most will likely be seen as negative. Buckle up brokers, it is going to be a bumpy ride.
Much of the change for 2021 will be the result of federal action. Between certain provisions of the Affordable Care Act (ACA) and legislation designed to limit the fallout from coronavirus, carriers have quite a few things to think about for 2021.
1. Premium Rebates to Customers
At the top of the list is the possibility that some health insurance companies will be paying out rebates to customers in accordance with the ACA. The ACA requires carriers spend at least 85% of their premium revenues on patient care. Believe it or not, some of the biggest carriers in the country may not reach that target.
According to CNBC, insurance company spending has collapsed with the near total elimination of elective procedures throughout the spring. And even as elective procedures slowly return, consumers are choosing not to seek medical care except during emergencies and when concerned about coronavirus.
This has left companies like Anthem and UnitedHealth Group no other choice but to offer rebates. The question is whether to pay the rebates now or wait until 2021.
2. Higher 2021 Premiums
The other side of the rebate coin is the potential for higher 2021 premiums. The PwC Health Research Institute seems to believe that healthcare costs could jump as much is 10% in 2021 as the industry seeks to catch up with all of the treatments and procedures delayed in 2020. That could mean premium increases of up to 5% even in the midst of rebates.
Carriers are reluctant right now to commit to premium numbers for next year. Why? Because there is so much uncertainty about the direction of COVID-19 and how it will impact healthcare spending in 2021.
3. Coverage for Testing
It is quite possible that health insurance carriers will be required to cover all COVID-19 testing, without exception, beginning next year. If so, that would certainly increase carrier spending quite a bit. To make it happen though, Congress needs to act.
The Families First Coronavirus Response Act (FFCRA), passed earlier this year, forces insurance companies to pay for COVID-19 testing when it is deemed medically necessary. But the law created an unintended loophole: insurance companies can get out of paying for any tests that are not ordered by a doctor. Expect that loophole to be closed via the next coronavirus relief package due later this year.
4. Higher Hospitalization Costs
Finally, a recent study from John Hopkins suggests that COVID-19 patients could be paying higher out-of-pocket costs related to hospitalization despite many insurance carriers dispensing with cost sharing for the time being. Self-insured health plans are most at risk.
John Hopkins says that Congress is looking at mandating that all employer-sponsored health plans wave cost sharing for COVID-19 treatment. If the plan becomes law, out-of-pocket expenses for COVID-19 hospitalizations will be eliminated. But that means higher healthcare spending by insurance companies and, ultimately, higher premiums.
Everything discussed here is mere speculation. Right now, COVID-19 remains a fast-evolving problem that will have profound effects on health insurance. No one really knows what 2021's healthcare plans will look like. The best we can do for the time being is keep an ear to the ground and pay attention to what insurance carriers and regulators are saying.