As proposed health insurance premium rates for 2017 are being filed with state insurance departments across the country, actuaries are providing an early look at what’s driving changes in premium rates for 2017 within the Affordable Care Act (ACA) individual and small group markets
Along with many others, the major factors that affect 2017 premium changes include:
- The underlying growth of health care costs. Although increases in health care spending are still relatively low compared to historic averages, prescription drug spending is expected to increase more rapidly than other medical spending.
- The sun-setting of the ACA’s transitional reinsurance program. Each year the gradual reduction in the reinsurance program has resulted in a corresponding increase in premiums. The final impact will occur in 2017, when projected claims are expected to increase by 4 to 7 percent due to the program ending in 2016.
- The composition of the risk pool and any changes in the assumptions used in premium calculations. If emerging experience regarding enrollment levels, risk profiles, or claims differs from what insurers expected when developing 2016 premiums, assumptions underlying 2017 premiums will be revised accordingly.
- The one-year moratorium of the ACA health insurance provider fee. This will lower premiums by about 1 to 3 percent.
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