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A Look at the Cost of Coverage in 2024

Long COVID, Medicaid redeterminations, Medicare payment rates among top considerations

July 25, 2023

Medicaid redetermination, inflation, and the return to “normal” after the pandemic could all affect the cost of health coverage next year, according to a new report from the American Academy of Actuaries.

The report, published annually, outlines the factors likely to drive changes in premiums in the individual and small group market for the next plan year.

“Although the uncertainty in predicting health care utilization and spending created by the effects of COVID-19 pandemic has subsided, the end of the public health emergency and changes in market regulations for 2024 introduce new sources of uncertainty into health spending projections,” the report notes.

Here are five takeaways from the report:

  • COVID-19 considerations:  Last year, patients began to catch up on care they delayed during the pandemic, but the volume was still below pre-COVID-19 levels. This makes it hard to forecast 2024 health care use.
    • After the federally purchased supply of COVID-19 tests and vaccines is depleted, it’s likely insurers will obtain these products from the commercial market. This means carriers could take on more of the costs for vaccines and tests.       
    • Treating patients with long COVID is likely to increase medical spending, but any increases in premiums would vary depending on the prevalence of the condition within a region.
  • Medicaid changes:  The pandemic-era provision for continuous Medicaid enrollment ended during April, and it’s uncertain how a shift from Medicaid to the individual market would affect the risk pool for coverage.
    • Changes from this shift away from Medicaid could be reflected in 2025 premiums after more information is available.
  • Small group trends:  Smaller employers continue to move toward alternative funding plans beyond Affordable Care Act-compliant (ACA), fully insured small group plans. These include level-funded plans, self-funded plans, multiple employer welfare arrangements, and association health plans.
    • This shift can affect premiums for those remaining in fully insured small group coverage.
  • Medicare’s role:  When Medicare payment rates do not keep up with the costs of care, it elevates pressure on commercial plans, the report notes.
  • Telehealth:  “The overall impact of the increased use of telehealth services on premium levels remains uncertain, however, as it’s still unclear whether telemedicine reduces utilization of more traditional services or will increase spending overall,” the report notes.

“Rate setting in the ACA-compliant individual and small group markets is complex, and pricing actuaries consider a wide range of factors when determining rate levels,” the report concludes. “How 2024 premiums will differ from those in 2023 depends on many factors.”

The 2023 issue brief from the American Academy of Actuaries is available online.