What Will Happen to the Medical-Loss Ratio in 2021?

Thanks to KFF, we now have some insight into what has happened to the medical-loss ratio in 2021. The short answer is that health care utilization, overall, is way down, so rebates for 2020 failure to achieve the medical-loss ration will be the order of the day for covered plans.

The even more interesting question is whether this trend will continue into 2021. After all, the pandemic is not quite yet history, recent legislation has extended ACA open enrollment and a whole lot more:

Looking ahead to rebates and premiums in 2022, insurers have the difficult task of predicting the continued impact of the pandemic. Insurers setting premiums for the 2022 plan year need to factor in several pandemic-related considerations, including but not limited to: potential pent-up demand for care, the negative impact of foregone care on the health of some enrollees, and the take-up of COVID-19 vaccinations and whether they need to be re-administered next year. Moreover, the Biden Administration and Congress have made several regulatory changes that will affect enrollment and costs in the Marketplaces for at least the next two years. Biden has opened a Special Enrollment Period (SEP) allowing anyone to sign up for Marketplace coverage until September. The American Rescue Plan Act of 2021 also temporarily expanded eligibility for Marketplace subsidies and increased the financial assistance to those who already qualified for subsidies. The Congressional Budget Office expects that these changes will drive more than a million additional enrollees into the individual market over the next two years, but the extent of enrollment growth and whether these new enrollees will be more or less expensive on average than current enrollees remains to be seen.

What a time to be an actuary or a forecaster!