The medical loss ratio piece 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 doesn’t meet the threshold ratio required.
The study estimates that rebates issued later this year will surpass most previous year totals, but still 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 2023 should consider several pandemic-related issues: the potential for a pent-up demand for care, the potential negative effect of delayed care on the enrollees’ health, the rate of future COVID-19 hospitalizations and the need for more booster shots. Commercial payers may also need to begin covering the cost of vaccines and boosters next year if federal funding runs out.
Preliminary 2022 estimates of payer rebates:
All markets
Total rebates: $1 billion
People owed a rebate: 8.2 million
Average rebate per person: $128
Individual market
Total rebates: $603 million
People owed a rebate: 4.3 million
Average rebate per person: $141
Small group market
Total rebates: $275 million
People owed a rebate: 1.8 million
Average rebate per person: $155
Large group market
Total rebates: $168 million
People owed a rebate: 2.2 million
Average rebate per person: $78
