Insurers propose 10% premium hike for 2023
Companies are seeking higher premium increases, mostly due to rising prices paid to hospitals, doctors and drug companies, as well as increases use of services by enrollees.
Marketplace insurers are proposing a 10% premium rate hike in 2023 in 13 states and DC. An analysis of early rate filings in these regions shows that companies are seeking higher premium increases, mostly due to rising prices paid to hospitals, doctors and drug companies, as well as increases use of services by enrollees.
According to Peterson-KFF, the analysis looks at plans participating in the Affordable Care Act (ACA) marketplaces but the main premium drives identified as reasons for the increases are systemic and not specific to ACA markets.
Most premium changes insurers are requesting for 2023 fall between about 5% and 14% (the 25th and 75th percentile, respectively). Compared to recent years, relatively few insurers are requesting to lower their premiums, with only 4 out of 72 insurers filing negative premium changes, and the remaining 68 insurers requesting premium increases.
Every year, insurers are asked to project their health cost “trend,” which is a combination of rising prices paid to hospitals, doctors, and pharmaceutical companies (inflation) and upward or downward expectations for utilization (or, the number of visits, stays, or prescriptions).
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As is the case in most years, health cost trend is a key driver of premium growth in the coming year. For example, in their 2023 filings, many insurers are projecting a trend of about 4-8%. Although insurers are primarily interested in price growth in the health sector, given the unusually high pace of inflation in the rest of the economy, there is potential for general economic inflation to flow through to the health sector.
Peterson-KFF also notes there are several federal policy changes that have the potential to affect premiums in 2023, including the expiration of the American Rescue Plan Act subsidies, the implementation of the No Surprises Act and the administrative fix to the Family Glitch.
The most significant potential policy change is the expiration of the American Rescue Plan Act subsidies. These subsidies provided temporary assistance for ACA Marketplace enrollees to pay for their premiums, boosting the amount of the subsidy for those who were already eligible and expanding subsidy eligibility to millions of middle-income people, many of whom were previously priced out of the markets.
Although the COVID-19 pandemic has had an enormous impact on the U.S. health system, for the third straight year, many insurers are projecting the pandemic will have a net neutral or only slight impact on health costs and premiums.