With coronavirus impacting New Yorkers’ jobs and income, many have had their health insurance disrupted as well. Anyone who might be shopping for insurance in the state marketplace next year should be aware that the process of setting the premium rates for 2021 is already underway.
Per the annual ritual, health insurers propose changes to the monthly premiums they charge members (almost always requesting an increase) and justify them by citing rising health care costs and other factors. Proposed rate changes are then subject to public comment and review by the state Department of Financial Services, which frequently reins them in.
This year, health insurers have had to propose premium rates for 2021 while still figuring out how they will be impacted financially by coronavirus in the coming months. While it’s clear that hospitals and doctors’ offices have taken a huge financial hit because people are avoiding non-coronavirus-related health care, the outlook for insurers is still hazy.
Despite the uncertainty, New York health insurers are generally assuming that coronavirus will raise costs in the coming year and factoring that assumption into their rate requests.
Fidelis Care, the most popular plan in the state’s individual insurance market, seeks to raise the monthly premiums on its health plans by an average of 18.8 percent in 2021, citing coronavirus as a major factor. Fidelis was only outdone by Oscar, which is seeking a 19.1 percent increase for plans in the individual market.
The premium rate requests for 2021 arrive as many New Yorkers are getting laid off, potentially forcing people who had employer-sponsored insurance onto the state’s Affordable Care Act marketplace. New Yorkers who are losing income may still have to contend with the rising premium rates in the commercial insurance market, or they may end up in an income bracket low enough to qualify for Medicaid, which is paid for with taxpayer funds.
“At the time of this rate filing submission, we acknowledge there is substantial uncertainty regarding the impact of the COVID-19 pandemic on claim costs and required premium rates in 2021,” Fidelis said in its rate application to the state. “But [we] have made a preliminary adjustment to reflect the increased risk and uncertainty associated with the pandemic and its secondary effects.”
The fact that people are postponing elective surgeries and avoiding non-urgent doctor’s visits amid the pandemic saves health insurers money. But Fidelis predicts that the money it’s saving now will translate into higher costs next year because of “pent-up demand.”
The insurer predicts the pandemic will also have lasting public health consequences that lead to higher health care costs. People may be in worse health in the coming year because they avoided needed medical care during the pandemic, or because their care was interrupted as they switched from employer-sponsored insurance to another type of plan when they were laid off, Fidelis suggests. Members who suffered from severe cases of COVID-19 may suffer lasting complications, Fidelis adds.
The insurer also notes that it is incurring the direct cost of covering COVID-19 treatment, as well as the cost of testing, which the state has mandated plans cover without patient cost sharing. It also cites the potential future cost of covering a coronavirus vaccine.
Overall, Fidelis attributed 8.4 percent of its total rate increase to the estimated impact of COVID-19, adding that it would like to continue to work with DFS to adjust rates if its assumptions are wrong.
The factors Fidelis cited in calculating its coronavirus-related rate increase were echoed by other plans as well as the New York Health Plan Association, which represents insurers.
But not all plans sought such high increases. For instance, MetroPlus, which is run by the city’s public hospital system, wants a 9.6 percent premium increase for its plans on the individual market. It says it predicts a 2.2 percent increase in costs due to the pent-up demand for health care that will be unleashed in 2021 because of coronavirus. The plan says it “does not wish to recoup” the costs associated with complying with the state’s mandates around coverage for coronavirus testing and other care.
Overall, plans in the state’s individual health insurance market are seeking to increase rates by a weighted average of 11.7 percent. In 2020, plans requested to raise premiums by an average 8.4 percent, perhaps learning their lesson after the 24 percent boost they requested the previous year was brought down to 8.6 percent by the state.
In the small group market, which serves small businesses with 100 employees or fewer, insurers are seeking to increase rates by a weighted average of 11.4 percent.
Health plans can only increase premiums so much without having to give something back. New York state law requires health plans to put at least 82 percent of their premium revenue toward actual health services, as opposed to administrative costs or profit.
If plans don’t meet this benchmark, they have to issue rebates to members--something that is not unprecedented. It is possible that lower health care utilization in 2020 will make plans come up financially short, although it’s important to note that rebates are based on an insurer’s financial data for a three-year period.
The initial health insurance migration sparked by the pandemic led to net losses in enrollment for commercial health plans offered through the New York State of Health marketplace and net gains for Medicaid, according to data the state Health Department provided to Gothamist.
Medicaid went from covering 6,065,502 New Yorkers at the end of February to 6,202,000 at the end of April, an increase of about 136,498 people. More New Yorkers also signed up for the Essential Plan, a heavily subsidized form of insurance for people who don’t qualify for Medicaid that charges a sliding-scale premium of $0 to $20 a month. Enrollment in the Essential Plan increased by 16,536 members between March 6th and May 23rd.
During that time period, commercial health plans sold in the state marketplace experienced a net loss of 17,283 members, or 6.4 percent of enrollees.
Those who wish to weigh in on 2021 premium rates have until July 5th to submit a comment.
This story is part of PriceCheckNYC, a collaborative project promoting transparency in health care from Gothamist, WNYC and ClearHealthCosts. We want to hear from you! Email us at [email protected] to share your stories about accessing--and paying for--health care during the pandemic. Or tell us about the personal costs of avoiding it. You can also submit your recent health care bills to our interactive health cost database below.
