Katie Keith
November 17, 2020 - Health Affairs
On November 6, 2020, the Centers for Medicare and Medicaid Services (CMS) released new medical loss ratio (MLR) data for the 2019 reporting year. This includes raw data from insurers in a public use file, MLR rebates by state and market for 2019, and a list of insurers that owe rebates for 2019.
Under Section 2718 of the Public Health Service Act, as added by the Affordable Care Act (ACA), insurers must spend a certain percentage of their premium revenue—80 percent in the individual and small group markets and 85 percent in the large group market—on health care claims or health care quality improvement expenses. If insurers fail to meet an MLR of 80 or 85 percent, they must rebate the difference to their enrollees. Insurers can issue a premium credit (for those enrolled with the same insurer) or make a check payment to individual enrollees; in the group market, savings can be shared between an employer and employee.
Overall, insurers owe record-high rebates of nearly $2.46 billion to more than 11.2 million consumers. This represents an average of $219 in rebates per person. Consistent with prior years, the rebates are most significant in the individual market, where insurers owe $1.7 billion to an estimated 5.1 million consumers. These rebates are up significantly from the $1.37 billion owed to nearly 9 million consumers last year, which was a record high relative to prior years.
Rebates vary widely by states and insurers. At the low end, no rebates are owed in four states. At the high end, insurers in Florida and Texas owe rebates of more than $246 million and $278 million, respectively. Insurers in California ($111 million), Illinois ($132 million), Missouri ($192 million), Pennsylvania ($166 million), Tennessee ($129 million), and Virginia ($162 million) follow. Specific insurers owe significant rebates, including Blue Cross and Blue Shield of Florida, Celtic Insurance Company, and Health Care Service Corporation (which operates Blue Cross-affiliated plans in Illinois, Montana, New Mexico, Oklahoma, and Texas).
The data is consistent with prior estimates from the Kaiser Family Foundation. High individual market rebates are being driven by insurers’ exceptionally profitable years in 2018 and 2019. (Rebates issued this year are based on financial performance from 2017, 2018, and 2019). The effects of the COVID-19 pandemic strongly suggest that the individual market will remain profitable for insurers who are reporting record profits across all markets.
Also on November 6, CMS posted an update on the methodology for calculating federal pass-through funding in states with a state-based reinsurance program under Section 1332 of the ACA. For 2021, the Department of Treasury’s Office of Tax Analysis (OTA) is slightly modifying its approach to pass-through estimates for state reinsurance waivers. OTA typically uses the most recent midsession review baseline to develop these estimates but, citing the pandemic, will instead update its model using more recent macroeconomic assumptions and individual market projections for 2021. Those updates will better account for the impacts of the pandemic and potential changes in enrollment and subsidies as consumers face coverage or income changes.
In particular, OTA will use the assumptions in IHS Markit’s economic outlook. OTA considered using baseline projections from the Trump administration’s 2020 budget but opted against doing so because those estimates do not reflect COVID-19-related changes.
The Health Resources and Services Administration (HRSA) requested public comment on a draft recommendation statement to prevent obesity in midlife women. The recommendation is to provide women aged 40 to 60 years who have a normal or overweight body mass index (BMI) with counseling on how to maintain their weight or limit weight gain to prevent obesity. HRSA will accept comment for 30 days; comments can be submitted here.
If adopted, this recommendation would be part of the HRSA-supported women’s preventive services guidelines under Section 2713 of the Public Health Service Act. As such, all non-grandfathered private health plans—including individual, small group, large group, and self-insured plans—would have to cover the counseling without cost-sharing (such as a copay or coinsurance). Plan and insurers would have to cover the counseling beginning in the plan year that starts on or after exactly one year from the issue date of the recommendation.