The key drivers of change to individual and small group premiums in 2023

With the 2023 individual and small group health insurance premium rate filing process currently underway, factors that will drive changes in premiums include uncertainty around the pandemic landscape and inaction over federal coverage policies, according to a June 22 report from the American Academy of Actuaries.

The academy's individual and small group markets committee publishes a public policy issue brief every year that outlines the factors that will drive gross premium changes in the following plan year.

Eight key takeaways for 2023:

  1. There is lingering uncertainty around how new COVID-19 variants will interact with vaccines and potentially evade immunity, thereby causing another jump in major health conditions.

  2. The expiration of the American Rescue Plan Act ACA premium subsidies is likely to lead to a decline in enrollment and a worse risk pool, leading to higher premiums.

  3. Medicaid redeterminations may cause more people to find coverage on the individual market, potentially improving the risk pool and lowering premiums, though at a lower amount than the increase caused by the ACA subsidies expiration. 

  4. Fixing the ACA "family glitch" and the narrowing of actuarial value de minimis ranges will influence premium changes.

  5. Inflation could have an effect on provider costs, but that may not happen until later plan years. Workforce shortages could also place upward pressure on provider payment rates.

  6. Payers are likely to consider changes to the composition of the small group market because small employers are shifting to self-funded, level-funded or other risk-rated coverage, or even leaving the market.

  7. Payers are also likely to consider the major changes in utilization patterns for telehealth visits and mental healthcare since the start of the pandemic.

  8. Enrollment in individual markets increased 21 percent from January 2021 to January 2022.


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