Insurers are preparing their 2021 rate filings right now. The dominant response in the ACA individual market filings that I have reviewed at this time is that COVID has minimal impact on rates at this time. Most insurers that are making this statement follow it up immediately with another statement that they are collecting as much data as possible and will change their mind on rate impact when the data changes. This is reasonable as there is a tremendous amount that we don’t know about a novel and new disease.
One of the things that we don’t know is what is the long term consequences of asymptomatic infection? We are fairly confident that asymptomatic infection is the most common disease experience trajectory. But is it a minor annoyance or is it a silent damage causing event?
A new study in NATURE suggests that it might be the later:
3. Over half of patients who were classified as asymptomatic based on the lack of any experienced symptoms showed abnormalities based on lung CT scans, indicating possible damage even in these patients. pic.twitter.com/rGpFzIu5AB
— Carl T. Bergstrom (@CT_Bergstrom) June 18, 2020
What type of medical care is needed due to either direct damage caused by an asymptomatic COVID disease course or excerbations of previously controlled medical conditions?
We don’t know that yet!
Insurers are still trying to price their 2021 products with massive systemic acturial, socio-political and clinical uncertainty.
The ACA markets that I follow have a market design that strongly shifts marketshare towards the most optimistic insurers. Optimistic insurers might be right. They could be horrendously wrong.
I think that a one way risk corridor where the federal government takes on some of the risk of insurers being really really wrong makes sense. The risk corridor could have the federal government pay 80% of the incremental claims if the medical loss ratio for 2021 is over 105%. A company running a 105% MLR for a year is in serious trouble. Its executive team will likely be replaced for that size of money losing wrong guesses. However, it is a survivable one-off event. From a federal perspective, an unlikely to be triggered back-stop potentially saves federal dollars as the premium tax credits may be smaller.
We are not even six months into COVID in the United States. There is a tremendous amount that we still don’t know even as we have to make projections, predictions and pricing offers for the future.