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Actuary: drug costs and deferred care shaped 2020 plan experience; board weighs rate impacts
Summary
Aon presented 2020 claims experience showing medical claim suppression during the pandemic and rising prescription drug and specialty drug costs; the board heard concerns about deferred care and approved recommendations on stabilization use that will lower 2022 rates modestly.
Mike Clark of Aon presented detailed 2020 claims and utilization analysis for Blue Shield HMO plans and the PPO city plan (administered by UnitedHealthcare in 2020 and scheduled to transition to Blue Shield on Jan. 1, 2022). Clark said the combination of pandemic‑related suppression in medical services and increased prescription drug costs produced mixed results: overall plan expenses per member rose modestly while prescription drug trends were an unfavorable cost driver.
Clark said for the Blue Shield HMO combination, per‑member expenses rose by about 2% while premiums rose about 1%, yielding a loss ratio around 96%. He noted that prescription drug claims were “the most unfavorable part of the increased driver” while medical claims were favorable due to lower utilization. He also described a pronounced increase in telehealth and a reduction in outpatient surgeries in spring 2020.
For the PPO city plan, Clark highlighted a higher concentration of catastrophic claimants and specialty drug costs: prescription drug increases were about 9% per covered life for the PPO population. He described concern that deferred and preventive care reductions in 2020 (mammograms, colonoscopies and other screenings) could produce later increases in cost and undiagnosed chronic disease and said Aon expects some return of deferred care in late 2021.
Board members asked about the timing and magnitude of a potential rebound in claims; Clark said his firm is monitoring national actuarial signals and that some return of deferred care into late 2021 is likely but the firm had not seen a large surge by the end of 2020.
Those presentations fed into rate stabilization recommendations the board later voted to apply to 2022 rating (see separate article).
