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Insurers anticipate a median 6% increase for Affordable Care Act health plan premiums in 2024, a KFF analysis found. Most proposed rate increases fall between 2% and 10%.
"A key driver of the increase in premiums in 2024 appears to be rising health prices," the report said. "While prices for health services tend to grow every year, it also appears that inflation in the rest of the economy may now be starting to flow into the health sector. Rising prices and utilization are not necessarily specific to the ACA individual market. Similar levels of medical trend were observed in small-group market filings as well."
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Because contracts between insurers and providers typically are negotiated for a year or longer, medical inflation often lags that in the rest of the economy. Looking ahead to next year, many insurers expect broader economic inflation to flow through to the health system and put upward pressure on premiums. Inflation also is affecting insurers' administrative costs, such as staffing. Several other factors also affect rates.
End of the public health emergency. 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.
Few insurers mention pent-up demand for non-COVID care that was missed in 2020, and most of those that do mention it say the level of use they are expecting in the remainder of 2023 and 2024 is consistent with pre-pandemic trends. Few insurers expect pent-up demand to drive up costs in 2024.
Unwinding of Medicaid continuous enrollment. Some people who have been disenrolled and deemed no longer eligible for Medicaid may enroll in ACA marketplaces, where they may be eligible for subsidies. Insurers who mention the unwinding of Medicaid continuous coverage often say the impact on costs is difficult to predict, so they are not adjusting premiums.
Diabetes and weight-loss drugs. Several insurers said these drugs are having an upward effect on their pharmaceutical spending.
Inflation Reduction Act. The IRA extends pandemic-era enhanced subsidies through 2025, bringing down premium costs for most consumers in this market. Few insurers mentioned the impact of the IRA subsidies on premiums, because there has been no change in the amount of the subsidy from last year.
"Most enrollees in this market are subsidized and do not pay the full premium," the report 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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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
