ACA Premiums Are Expected to Increase in 2024 Due to Rising Health Care Costs
Health care insurers are proposing a median 6% increase for Affordable Care Act (ACA) health plan premiums in 2024, according to a Kaiser Family Foundation (KFF) report. Rising prices for health care services and medications are a key driver for the proposed increase in 2024 ACA Marketplace premiums. While medical inflation tends to lag behind the rest of the economy due to the nature of provider contracts, it appears that inflation is starting to impact the prices of health care services, causing them to increase. As a result, many insurers expect inflation to place upward pressure on health care premiums as well as administrative costs.
“Most enrollees in [the ACA] market are subsidized and do not pay the full premium. However, premium increases can affect federal spending, and the driving factors behind these increases illustrate broader trends driving health care costs in 2024.”
– KFF Report
The report also mentioned other factors affecting 2024 ACA premiums, including the following:
- Elevated health care utilization—Health care utilization decreased during the COVID-19
pandemic; however, utilization is expected to return to pre-pandemic levels in 2023 and 2024, which is leading to increased premiums. - Resumed Medicaid determinations—On Feb. 1, 2023, Medicaid redeterminations resumed, disenrolling more than 3.8 million people so far. Insurers expect that some disenrolled individuals will enroll in ACA Marketplace plans, which could impact premiums.
- Increased demand for diabetes and weight loss drugs—As more individuals turn to expensive glucagon-like peptide 1 diabetes and weight loss drugs, insurers expect this trend to have an upward impact on pharmaceutical spending, thus increasing premiums.
- Expanded subsidies under the Inflation Reduction Act—This law extends pandemic-era enhanced subsidies through 2025, which will likely reduce premiums for many individuals enrolled in ACA Marketplace plans.
What's Next?
The current rate requests by insurers are preliminary and may change during the review process before being finalized later this year. However, the KFF report highlights how affordability and rising health care costs will continue to be top challenges for insurers for the foreseeable future. By taking note and monitoring current ACA Marketplace premium trends, employers can help their employees better understand their Marketplace coverage choices.
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The content of this News Brief is of general interest and is not intended to apply to specific circumstances. It should not be regarded as legal advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice. © 2023 Zywave, Inc. All rights reserved.
