Highmark Will Distribute $12.3M in Affordable Care Act Rebates

Highmark Blue Cross Blue Shield Delaware will distribute more than $12.3 million in Affordable Care Act rebates, the state’s insurance commissioner announced.

“With decreased utilization of health services in 2020 and 2021 factoring into MLR for the next four years, and expected increases of utilization factoring into rates for 2022, this is yet another reminder that COVID will impact all aspects of healthcare, including insurance, for much of the foreseeable future,” said the state’s insurance commissioner Trinidad Navarro.

Eligible residents include enrollees who purchased health plans from the payer that were not on the Affordable Care Act marketplace, those who purchased plans on the Affordable Care Act marketplace, and small group health insurance marketplace policyholders.

The rebates are split between individuals and small group health insurance market policyholders, which are typically small businesses. In the state of Delaware, over 20,800 residents qualify to receive rebates from the state’s Affordable Care Act health plan along with 20 small groups.

Individuals on a policy that is eligible for a rebate will receive $8.4 million of the rebate return while small businesses and other small group health insurance market policy holders will receive the remaining $3.9 million. Individual policyholders will receive on average $405 and small group health plans will see on average $1,514 in rebates out of a total of over $10,000.

The state recommended that employers leverage these rebate dollars to enrich employees’ healthcare benefits, lower premiums, or offer distribute the rebate among employees in a more direct way.

Affordable Care Act rebates are based on the three-year average of a health plan’s medical loss ratio, also known as the 80/20 rule, medical loss trend, or medical cost ratio. The rebates for this year are based on the combined average of 2018, 2019, and 2020 rebates.

Rebate recipients will receive a check for the appropriate amount the week of September 15, the state promised.

In 2020, the pool of rebate recipients who were individual policyholders was smaller—19,000 individuals were eligible to receive a rebate. However, the rebate total was higher in 2020 than in 2021 at over $12.6 million, which averaged out to more than $660 per individual policyholder.

Experts have anticipated high rebates in 2021 due to the impact of the coronavirus pandemic. 

The crisis boosted payers’ margins as members deferred care. As a result, experts noted that medical loss ratios would drive rebates upward.

Payers attempted to offset the lack of healthcare spending by various means, including by offering premium credits and housing and food support during the pandemic. 

AHIP argued that the profits that payers experienced in 2020 would go toward long-term coronavirus treatment and eliminating cost-sharing. If healthcare spending did not spike in 2021 as expected, the payer organization noted that those profits would still return to members in the form of rebates.

However, in the first half of 2021, hospital admission rates and 2021 healthcare spending remained lower than expected levels. This could boost profits even higher in 2021, as it appears that the healthcare system had not yet seen the full impacts of deferred care. If it does, payers could be facing another year of high rebates in 2022.

Only days before announcing individual and small business rebates, Delaware’s insurance commissioner announced that the state would raise its Affordable Care Act marketplace premiums in 2022. The insurance commissioner pointed to anticipated delayed care trends as the primary motivation for this decision. 

Although the state’s premium is increasing by three percent, the rate remains lower than what the commissioner originally projected and 15 percent lower than they were a few years prior.