5 things driving 2020 premium rates

Morgan Haefner - Print  | 

As health insurers begin filing their proposed premium rates for 2020, there are five key forces driving rate changes, according to the American Academy of Actuaries.

When developing premiums, actuaries base proposals on medical claims and administrative costs for pools of groups or individuals purchasing health insurance. These rates can be affected by laws and regulations, unit costs, intensity of services and more.

According to the American Academy of Actuaries, there are five key premium drivers for 2020:

1. Underlying growth in healthcare costs: The projected increase in costs of medical services and prescription drugs for 2020 is set to be in line with 2019, which ranged from roughly 5 percent to 8 percent.

2. Recent and ongoing policy changes: The American Academy of Actuaries noted that expansions in the availability of short-term health plans, association health plans and health reimbursement arrangements will affect 2020 premiums. In addition, the elimination of the ACA's individual mandate will play a role in 2020 premium setting.

3. Changes in the risk pool composition and insurer assumptions: Insurance premiums in 2020 will reflect changes in risk profiles of the enrollee population. They will also include any changes in insurer assumptions from 2019.

4. State actions: Some states have moved to create reinsurance programs, implement their own individual mandate penalties and enact rules that affect health insurance coverage. These actions will affect 2020 premiums, the American Academy of Actuaries said.  

5. Federal fees: Reinstatement of the health insurance provider fee, mandated by the ACA, will play into how health insurers set rates for 2020.

For the full brief from the American Academy of Actuaries, click here.

More articles on payers:
Aetna expands home care network: 4 things to know
5 recent payer data breaches
Centene, WellCare shareholders approve merger deal

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

To receive the latest hospital and health system business and legal news and analysis from Becker's Hospital Review, sign-up for the free Becker's Hospital Review E-weekly by clicking here.