America's Health Insurance Plans details several factors that may drive premium rates up or down in 2017.
Here are five factors:
1. Healthcare spending. Last year, U.S. healthcare spending increased 5.5 percent due to ACA coverage expansions and exorbitant prescription drug spending. In 2015, prescription drug spending totaled $456 billion, with prescription drug spending comprising 16.7 percent of the estimated $2.7 trillion the United States spent on overall personal healthcare services. High medical spending is likely to result in higher premiums in 2017.
2. Varying risk-pools. Throughout the United States, risk pool stability and participation levels significantly differ across states. The American Academy of Actuaries states if lower cost individuals maintain their prior coverage and higher cost people purchase new coverage, medical spending for those purchasing new coverage may be higher than anticipated. CMS announced transition policies will expire by the end of next year, which may drive down coverage cost, on average.
3. Coverage transitions. Individuals participating in the ACA exchanges are more likely to switch plans based on price, which may lead to instability in the health insurance market. However, the gravity of this impact is uncertain as engaged cost-conscious consumers may drive down premium prices while the instability in the market may lead to higher premiums.
4. ACA Premium Stabilization Programs updates. The ACA Premium Stabilization Program includes risk adjustment, transitional reinsurance and temporary risk corridors program. A Milliman analysis found some upward pressures on rates next year may be due to the phase out of CMS' reinsurance program and uncertainties with CMS' risk corridor program.
5. Coverage benefits. A McKinsey report found narrowed plans result in premium savings of more than 20 percent, as opposed to traditional broader network plans.
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