Health insurers are proposing a median premium increase of 6% for Affordable Care Act Marketplaces in 2024, a new analysis shows. Most proposed premium increase rates from insurers are between 2% and 10%.
The analysis was published last week by KFF. The organization collected the proposed rates from 320 insurers from RateReview.Healthcare.gov. It also collected 58 insurer actuarial memoranda from state rate review sites.
The rise in prices for medical services and medications is one of the big drivers behind the increase in premiums for ACA Marketplaces.
“The primary driver of the premium increase is the [increase] in the cost of healthcare. The increases are associated with increases in the ‘unit’ cost of services primarily from hospitals, physicians, and pharmaceutical companies, coupled with increases in the consumption of services, or ‘utilization,’ by members,” Anthem Health Plans of Kentucky said in publicly available documents reviewed by KFF.
Insurers also noted that a rise in the utilization of healthcare is leading to the increase in premiums. Healthcare utilization dropped in 2020 because of Covid-19, but has grown since then.
However, there is a lot of “uncertainty” when it comes to Covid-19 and the pandemic and how premiums will be affected, according to KFF.
“With the end of the Public Health Emergency (PHE) this year, plans can now charge cost sharing for Covid-testing, which could have a downward effect on insurer costs and therefore a downward effect on premiums,” KFF said. “Conversely, the Covid vaccine will be commercialized, meaning increased cost to insurers on a per-dose basis. The use of Covid-19 related prevention and treatment may diminish, though, if severe cases continue to be less common. On net, most insurers that publicly quantify the effect of the Covid-19 pandemic in their filings expect their pandemic-related costs to decrease in 2024, having a small downward effect on premiums.”
Additionally, some insurers expect the unwinding of the Medicaid continuous enrollment requirement to impact premiums, KFF said. During the Covid-19 public health emergency, Medicaid programs had to keep enrollees continuously enrolled, but this requirement ended April 1. So far, more than 3.8 million people have been disenrolled from coverage. Some of the people disenrolled could enroll in ACA Marketplace plans.
“A relatively small number of insurers expect the Medicaid unwinding to lead to a sicker group of people signing up for ACA plans, which would then have an upward effect on premiums,” KFF stated.
Diabetes and weight loss drugs are also possible drivers of premium increases, the report noted.
However, premium hikes are not expected to have a major impact on Marketplace enrollees.
“Most enrollees in this market are subsidized and do not pay the full premium,” KFF said. “However, premium increases can affect federal spending and the driving factors behind these increases illustrate broader trends driving health costs in 2024.”
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