Individual Major Medical Plans Could Still Exist in 2019: Actuary

Dave Dillon, an actuary, predicts that individual major medical insurance products will continue to exist in the United States next year.

If the current regulatory environment stays reasonably stable, prices could even be somewhat more stable in 2019 than they were this year, Dillon says in a new commentary.

(Related: Actuary Sizes Up 2018 Individual Health Picture)

Dillon, a vice president at Lewis & Ellis Inc., helps insurers design health insurance products. He has also helped states review health insurance rates, and he hears from other actuaries through his work on the Society of Actuaries Health Section council.

Health insurers are already developing their rates for 2019 coverage.

A year ago, he predicted that, in many parts of the country, typical individual major medical rate increases could range from about 10% to 20%, and that many insurers would continue to participate in the market.

This year, he is giving a somewhat more optimistic forecast about how the 2019 market could look.

He estimates that:

• The underlying level of medical cost inflation could range from 6% to 8%.
• The move by Congress to eliminate the Affordable Care Act penalty for people who fail to have solid major medical coverage could add 7.5 percentage points to 2019 rate increases.
• The Tax Cuts and Jobs Act reduction in the corporate income tax rate could cut typical increases by at least 0.5 percentage points.
• The elimination of the ACA health insurer fee could reduce rate increases by 2 percentage points.

All of those factors combined could lead to add about 3.5% to 13% to 2019 rate increases, on top of whatever changes insurers seek as a result of the nature of their own enrollees and their own markets, according to ThinkAdvisor Life/Health calculations based on Dillon’s figures.

In an email, Dillon said many individual major medical issuers did better in 2017 than in 2016.

“At this time, it appears that there will still be many individual major medical products available in 2019,” Dillon said.

Issuers’ solid 2017 performance “should help bring some stability to the markets and could produce slightly lower rate increases than [in] 2018,” Dillon said. “The 2019 rate increases will primarily be driven by claims cost trend and the impact of the non-funding of the [ACA] cost-sharing reduction program.”

The ACA cost-sharing reduction program provides subsidies that help ACA exchange plan users with household income below 250% of the federal poverty level pay health plan deductibles, co-payments and coinsurance amounts.

The administration of President Donald Trump stopped making cost-sharing reduction program subsidy payments to insurers in October 2017, after concluding that the administration lacked authorization from Congress to make the payments.

— Read ACA World 2017: Rates might not be THAT bad on ThinkAdvisor.

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