Health carriers propose Affordable Care Act (ACA) premium rates for 2022
The Maryland Insurance Administration has received the 2022 proposed premium rates for Affordable Care Act products from health carriers. Health carriers are seeking a range of changes to the 2021 premium rates for plans sold in Maryland’s Individual Non-Medigap (INM) and Small Group (SG) markets in 2021.
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In the INM market, carriers have requested an overall average rate increase of +3.5%, with averages by carrier and product ranging from -7.3% to +7.9%. In the SG market, carriers have requested an overall average rate increase of +7.2%, with averages by carrier and product ranging from -22.5% to +16.0%. In the INM, stand-alone dental market, carriers have requested an overall average rate increase of +0.3%, with averages by carrier and product ranging from 0.0% to +3.8%.
“It is clear from our preliminary review of the rate filings that projections regarding the financial impact of COVID-19 on claim trends is a key factor in this year’s rate requests. It is also clear that there is a significant difference in those projections among carriers and across products,” noted Insurance Commissioner Kathleen A. Birrane. “We have already reached out to the carriers with our first set of questions, and understanding how carriers are accounting for COVID-19 is an important first focus for our actuarial team.”
Across all markets, rate adjustments by carriers to account for COVID-19 ranged from zero to 14.1%. These adjustments account for the fact that claims utilization was depressed during some months of the 2020 experience period and are expected to increase to a more normal level in 2022, and for potential future claims related to COVID-19.
The rates submitted for the INM market include the estimated impacts from the Hogan Administration’s innovative, state-based reinsurance program established in 2019. The reinsurance program was designed to reduce and stabilize INM rates, following several years of annual double-digit increases tied to increasing morbidity and decreasing enrollment after the initial implementation of the Affordable Care Act. The expectation was that the reinsurance program would result in an overall average reduction of 30% for INM rates after three years, with future rate increases tied primarily to increases in the cost of care. “Governor Hogan delivered on that objective sooner and better than anticipated,” noted Commissioner Birrane. “The reinsurance program went into effect in 2019 and the 2021 rates reflected an overall 32.8% decrease from those charged in 2018.”
The Commissioner noted that, having achieved that milestone, the impact of the reinsurance program is now in its second and long-term phase, serving to keep rate increases in line with cost trends. “Having rapidly achieved stabilization, rate increases in the INM will occur, but those increases should be relatively modest single digit changes that are tied to increases in the cost of care,” Commissioner Birrane added. The Commissioner also noted that even though this year’s filings seek an average increase of 3.5% in the INM market, rates in that market as filed would still be down by -30.8% over the four-year period from 2018 through 2022 (filed).
In Maryland, only those rates that are approved by the Insurance Commissioner may be charged to policyholders. Before approval, all filings undergo a comprehensive review of the carriers’ analyses and assumptions. Public comments are considered as part of the review process. By law, the Commissioner must disapprove or modify any proposed premium rates that appear to be excessive or inadequate in relationship to the benefits offered, or are unfairly discriminatory. The Maryland Insurance Administration (MIA) expects to issue decisions about rates and products no later than September 7, 2021.
Commissioner Birrane will hold a quasi-legislative virtual public hearing on this matter on Thursday, July 20, 2021 from 9:30 a.m. to 12:30 p.m…“Feedback from all stakeholders is very important and we urge everyone to participate in the public hearing,” Commissioner Birrane said. “Health insurance costs impact everyone and we want to give all Marylanders the opportunity to be heard as we consider the proposed rates.”