My 2021 Rate Change Project starts under the cloud of #COVID19

Every year, I spend months painstakingly tracking every insurance carrier rate filing for the following year to determine just how much average insurance policy premiums on the individual market are projected to increase or decrease.

Carriers jump in and out of the market, their tendency repeatedly revise their requests, and the confusing blizzard of actual filing forms which sometimes make it next to impossible to find the specific data I need. The actual data I need to compile my estimates are actually fairly simple, however. I really only need three pieces of information for each carrier:

  • How many effectuated enrollees they have enrolled in ACA-compliant individual market policies;
  • What their average projected premium rate increase (or decrease) is for those enrollees (assuming 100% of them renew their existing policies, which never actually happens); and
  • Ideally, a breakout of the reasons behind those rate changes, since there's usually more than one.
  • In 2015, I projected that the overall average rate increases for 2016 would be roughly 12-13% nationally. It turned out to be around 11.6%.
  • In 2016, I projected that the overall average rate increases for 2017 would be roughly 25% nationally. It turned out to be around 22%, but that only included on-exchange Silver plan enrollees across 44 states (I included all metal levels, both on and off exchange, across all 50 states).
  • In 2017, I projected that the overall average rate increases for 2018 would be around 29% nationally, and that 60% of that would be due specifically to deliberate Trump Administration actions designed to sabotage the ACA markets. It turned out to be around 28% nationally.
  • In 2018, I projected that the overall average rate increases for 2019 would be around 2.8% nationally, and that premiums would have dropped around 5.4% on average if not for the ACA's individual mandate being repealed & short-term & association plans being expanded. Hhealthcare think tank Avalere Health came to almost the exact same estimates on the actual rate changes, while Brookings Institute healthcare analyst Matthew Fiedler concluded that unsubsidized ACA individual market premiums would indeed have dropped by around 4.3% nationally on average in the absence of mandate repeal and expansion of #ShortAssPlans.
  • In 2019, I projected that overall average rate changes for 2020 would be flat year over year...technically, I pegged them dropping by just a hair (0.2% nationally). I turned out to be pretty damned close in most states (with an odd, seemingly massive discrepancy in Vermont, which may turn out to have been a clerical error on CMS's part).

In other words, I've had a pretty good track record of accurately projecting average premium increases for the upcoming year for four years in a row.

For 2021, I'm off to a late start due to being up to my ears with my COVID-19 County-Level Tracking Project. I normally would've already had Virginia and Oregon's preliminary rate requests posted by now, since they're generally the first out of the gate, but I'm running a week or so behind this year.

Speaking of COVID-19, it's gonna cause some massive uncertainty and "throwing darts blindfolded" this summer, even for skilled actuaries. My colleagues Dave Anderson and Andrew Sprung have already each written several pieces speculating about the potential impact on 2021 premiums; I'll be joining them with my own take very soon.

As Anderson has noted, the closest parallel for 2021 in terms of uncertainty is probably...2014, the very first year of mandatory ACA-compliant policies, when the carriers mostly had almost no idea what the risk pool landscape was going to look like for the upcoming year. Stay tuned...