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Covid-19 & 2021 Renewal Increases

Analysts for California’s insurance marketplace recently projected that costs related to treating patients with COVID-19 could top $251 Billion nationally.On the other hand, 2020 healthcare spending is projected to be down as much as $575 billion since many are avoiding ordinary medical treatment during the pandemic. How will these two things affect premium increases in 2021 from the major health insurers? According to the same California analysis mentioned above, the increases in premium for retail health plans could be as high as 40%!

While I am not an actuary, the math here does not seem to support a massive increase. And, so long as the “pandemic” phaseof COVID-19 is behind us before 2021, then the cost of treatments in 2020 should not be priced into renewals as it is not an ongoing cost.

If history is any indication of what comes next,an increase is involved and likely a large one. What can employersdo to avoid this? The timing could not be better to consider leaving the retail marketplace of employer sponsored healthcare.

We are unique in California in that most employers (70%) are purchasing their healthcare retail. Those employers that have already made the transition to a custom health plan are in a much stronger position. Their claims are down as much as 70% and as a result their plan costs are much lower–in real time. In addition, they do not face the same uncertainty that retail buyers are facing at their next renewalas their plan costs are tied to the real cost of care. Could it be time to leave the retail marketplace?

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