Premiums for health insurance plans offered under the Affordable Care Act are set to hold steady in 2021.
As of October 28 three days before open enrollment began, final approved rate filings for 28 states showed an average increase of 1.2%.
Premiums are stable despite COVID-19 and potential risks to the ACA as the Supreme Court takes up a challenge to the law in November.
The federal market serving 36 states launched enrollment November 1, 2020, wrapping up December 15, 2020.
COVID a non-factor
“The expected increase is being canceled out by a reduction in nonessential services.”
Following years of stiff increases after the ACA was enacted, rates have stabilized since 2018.
Approved rates for all 50 states in the last period, 2020, posted an average drop of 1.09% from 2019.
The Centers for Medicare & Medicaid Services (CMS) reports the average monthly premium for the second lowest cost silver plan (also called the benchmark plan) dropped by 2% to $1,486 for a typical family of four in 2021.
Factors behind rising rates can include skyrocketing pharmaceutical costs, hospital mergers and conglomerates absorbing doctor practices.
Rates can drop when states institute reinsurance programs that reduce unsubsidized premiums.
Fears had mounted that COVID-19 would cause rates to jump. But the virus turned out to be a non-event as far as ACA premiums were concerned.
“This year’s biggest story is that back in spring there was concern COVID would cause premiums to skyrocket,” says Charles Gaba, who runs ACASignups.net. “But instead, it’s having a negligible impact because the expected increase is being canceled out by a reduction in nonessential services. People are putting off procedures. And it looks like it will carry over to next year.”
Gaba notes it took time for insurers to figure out how to price the individual ACA markets.
“There were a few years when they were raising rates dramatically to match actual costs,” he says. “It’s not so much that costs skyrocketed – it’s that they used to deny coverage to people with preexisting conditions but then they had to start covering a whole bunch of people they’d thrown under the bus.”
“Once they figured it out, they overcorrected and ended up raising prices too much,” Gaba added. “Then they had to bring them down to comply with the ACA’s cost rules.”
ACA insurance plans come in different price tiers bronze, silver, gold and platinum. The average projected annual premium for 2021 is $6965, up $53 on 2020.
Enrollment in the ACA has been stable in recent years. But Gaba says COVID-19 and the Supreme Court case present unknowns that could swing enrollment either way, scaring people off, or into signing up.
COVID-driven unemployment is another factor that could impact this year’s enrollment. People who’ve lost employee coverage may flock to the exchange. But, says Gaba, “There are also people on the exchange whose income has dropped off, and may be shifted over to Medicaid. An influx on one side might be canceled out on the other.”