The Affordable Care Act’s 2021 open enrollment period is set to begin Nov. 1, and the landscape of health insurance coverage looks a little different this year. The COVID-19 pandemic and the subsequent economic crisis have led to a significant disruption in coverage, especially for those losing employer-sponsored insurance. Furthermore, the U.S. Supreme Court is scheduled to hear arguments on Nov. 10 over whether the entire federal health law should be overturned.
Against this backdrop of uncertainty, millions of Americans will shop for health insurance plans on the ACA’s federal and state marketplaces (or exchanges) during open enrollment.
Open enrollment is the annual period when individuals can sign up for a new health plan, renew their current plan or change their current coverage. While some states extended enrollment deadlines, most consumers will have from Nov. 1 to Dec. 15 to sign up for a plan with coverage beginning Jan. 1, 2021.
More States Run Their Own Marketplaces
Most states rely on the federally facilitated marketplace for open enrollment, and residents in these states will sign up for health plans on www.HealthCare.gov. Fourteen states and the District of Columbia maintain state-based marketplaces, and consumers in these states will shop for 2021 plans on state-run websites. New Jersey and Pennsylvania will be the latest states to opt for running their own exchanges, citing potential cost-saving opportunities and greater control over marketplace functions as reasons for making the switch. Kentucky, Maine, New Mexico and Virginia all plan to transition to state marketplaces in the coming years.
Additionally, three state exchanges—in Maryland, New York and the District of Columbia—are still operating COVID-19 special enrollment periods, allowing residents to sign up for a 2020 plan before their 2021 coverage begins.
Premiums Down and Insurer Participation Up
Early rate filings from insurers indicated premiums would remain relatively stable for 2021—even with the uncertainty surrounding COVID-19. This trend seems to have continued as the Centers for Medicare and Medicaid Services released finalized premium data for the 36 states using HealthCare.gov showing overall premium rates would decrease by 2%.
An analysis by the Kaiser Family Foundation of all 50 states and the District of Columbia showed insurers proposing finalized rate changes between a 42% decrease and a 25.6% increase. However, half of insurers offering marketplace plans are implementing premium rate changes ranging from a 3.5% decrease to a 4.6% increase.
While this is the third consecutive year that premiums dropped on the federal marketplace, average premiums are still higher than they were in 2017. For example, an unsubsidized monthly premium for an average benchmark plan for a 27-year-old will cost $369 in 2021 compared with $289 in 2017.
Many consumers will also have more insurance options to choose from when shopping for health plans, as six more insurers will offer coverage on the federal exchange. This increases the total number of insurers from 175 in 2020 to 181 in 2021. In addition, just 4% of consumers shopping on the federal marketplace this year will have access to only one insurer, down from 29% in 2018.
At least seven state-run systems will see additional insurers enter the marketplace or existing insurers extend coverage options in different areas of the state.
Though Markets Look Stable, Questions Remain
Several factors contribute to mostly single-digit premium rate changes for 2021 health plans and stronger insurer participation. First, health insurers have remained relatively profitable throughout the pandemic as patients have deferred care and insurers face fewer health claims.
Health insurers—who are required to use 80% (85% for large-group plans) of premium income on health claims and quality improvement—are also providing record high premium rebates to consumers based on their 2017, 2018 and 2019 financial performance. This could indicate insurers are currently overpricing their health insurance plans.
Additionally, 14 states operate state-based reinsurance programs, which protect insurers from high-cost medical claims. Several insurers in these states—such as Maryland, Maine and Pennsylvania—indicated premiums would be higher without the reinsurance program.
While health insurance premiums and participation look relatively stable for 2021, some insurers have reported lower earnings in recent months as patient visits rebound to pre-pandemic numbers. Also, fewer than half of insurers incorporated the effects of COVID-19 when calculating 2021 premiums due to persisting uncertainties surrounding the pandemic—such as the costs of COVID-19 testing, treatment and vaccination, and a potential pent-up demand for health services.
Thus, questions remain over just how the pandemic will affect insurers as well as consumers moving forward.
Jack Pitsor is a research analyst in NCSL’s Health Program.