Payers are expecting to issue a total of about $1.1 billion in medical loss ratio rebates across all commercial markets in 2023, according to preliminary estimates published May 17 by KFF.
The medical loss ratio provision of the ACA limits how much payers can keep in premium income to use on administrative and marketing costs, or for profits. Rebates are sent back to members if the payer does not meet the threshold ratio required.
KFF's analysis estimates that rebates issued later this year will surpass last year's $1 billion total but will fall short of the record-high rebate totals of $2.5 billion in 2020 and $2 billion in 2021.
Payers currently setting their premiums for 2024 should consider several issues: the potential for pent-up demand for care due to COVID-19, the impact of Medicaid redeterminations, and increases in provider wages and other costs due to inflation.
Preliminary 2023 estimates of payer rebates:
All markets
Total rebates: $1.1 billion
Individual market
Total rebates: $500 million
Small group market
Total rebates: $330 million
Large group market
Total rebates: $250 million