Health insurance premiums for people purchasing plans through Healthcare.gov and state-based marketplaces are expected to increase sharply next year. According to an analysis by the nonpartisan Kaiser Family Foundation (KFF), the average premium could rise by 75% compared with this year.
How Insurers Set Rates
Each summer, insurance companies set their rates for the following January and submit them to state regulators. Researchers at KFF analyze these filings, which often run hundreds of pages, to predict costs for consumers.
“Sometimes insurance companies include a narrative explaining why premiums are rising,” says Cynthia Cox, director of KFF’s Program on the Affordable Care Act. This year, insurers are pointing to the expiration of enhanced premium tax credits as a key factor driving increases.
Role of Pandemic-Era Subsidies
Enhanced subsidies were introduced during the COVID-19 pandemic under the Biden administration. They made health insurance more affordable and helped enrollment in ACA plans reach a record 24 million people, lowering the uninsured rate to historic lows.
With these subsidies set to expire, premiums could jump significantly. For example, someone paying $60 per month this year might face $105 per month next year.
Potential Impact on Coverage
Higher premiums may lead some generally healthy people to forgo insurance, leaving the market with a higher concentration of people with chronic conditions or expensive medications. Cox explains, “Insurance companies are expecting the market to get sicker next year, which drives premiums even higher.”
The Congressional Budget Office estimates that allowing subsidies to expire could increase the number of uninsured Americans by 4.2 million.
Political Challenges to Extending Subsidies
Extending the subsidies would require bipartisan support, which appears unlikely. The Republican Study Committee criticized enhanced subsidies as unsustainable, and lawmakers like Senator Bill Cassidy have urged Congress to reject extensions.
Cox notes that recent ACA enrollment growth has been concentrated in Republican-leaning states such as Texas, Florida, and Georgia. Rising premiums could reverse this trend and leave millions without coverage.
Looking Ahead
The Congressional Budget Office projects that up to 8.2 million people currently covered by ACA plans could become uninsured due to the combination of expiring subsidies and regulatory changes. Consumers should review their options on Healthcare.gov or state marketplaces and plan ahead for potential premium increases.
Key Takeaways
- ACA premiums could rise an average of 75% next year.
- Expiration of pandemic-era subsidies is the main driver.
- Higher costs may increase the number of uninsured Americans.
- Consumers should explore all marketplace options before rates change.
YOU MAY ALSO LIKE
