A theme at JP Morgan, as reported by STAT's Bob Herman, was the determination of health systems to demand higher reimbursement to cover cost increase for labor and supplies. Their demands, which will have to be met on a rolling basis throughout 2023, began with Medicare's payment update in October. In the February print we should see increases in private payer rates as well.
The trend calls into question HUM's assertion that benefit costs will be lower because of the excess mortality among high cost Medicare populations with comorbidities. They probably are not wrong. However, they are leaving out of that analysis a lower PMPM for healthy members AND the demands for price increases from providers, motivated first by Medicare increases.
For Medicare Advantage plans, upward pressure on rates is difficult to translate into higher premiums like we are seeing in the non-government sector. Medicare eligible populations have gotten used to zero premium plans. The slowing growth of the eligible population will only mean the knife fight for members turns into decimation of weaker plans like ALHC, CLOV and a host of small state and regional players.
Let the (consolidation) games begin.
Emily Evans
Managing Director – Health Policy
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