ACA premiums rise 3.4% in 2023, as rate of new insurers slowed
Premiums are greatly affected by the number of insurers competing in the rating region: the more insurers, the lower the benchmark premiums, according to the Robert Wood Johnson Foundation report.
Monthly health insurance premiums for Affordable Care Act (ACA) benchmark plans increased by an average of 3.4% in 2023. That’s the key takeaway from a new analysis by the nonprofit Urban Institute.
The premium increase reverses a national trend of annual premium reductions from 2019 to 2022, when average benchmark premiums decreased by an average of 2.2% annually. Researchers point to persistent inflation that drove overall health care costs upward and uncertainty regarding whether the ACA’s enhanced premium tax credits would be extended as primary drivers of the increase in premiums.
The analysis, titled “Changes in Marketplace Premiums and Insurer Participation, 2022-2023” and funded by the Robert Wood Johnson Foundation, also noted the following:
- Premiums for benchmark plans — the second lowest-cost silver plan in the ACA Marketplace — are greatly affected by the competitiveness of health care markets. In areas with a single insurer, for example, premiums were an average of $128 higher than those with five or more insurers.
- Increased competition in urban regions kept benchmark premiums lower than in rural areas.
- States that expanded Medicaid eligibility in accordance with ACA saw smaller premium increases.
“Marketplace premium increases were relatively modest in part because health care inflation has lagged [in] other sectors, a situation which may well change,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “While competition creates some welcome downward pressure on premiums, the expansion of the Premium Tax Credits has been the most critical factor driving the significant enrollment growth we have seen in the last two years.”
Related: Texas judge strikes down ACA’s free preventive care requirement
Also worth noting: The number of insurers increased only slightly between 2022 and 2023 — from 227 to 232 — which was preceded by a bigger jump between 2020 (185 insurers) and 2022. Meanwhile, commercial carriers such as Aetna, Cigna, and United Healthcare increased the number of markets in which they offered plans. Premiums are greatly affected by the number of insurers competing in the rating region: the more insurers, the lower the benchmark premiums, according to the report.
“The number of provider-sponsored plans (usually built around hospital systems) also increased, participating in 10 markets in 2020 but 25 in 2023,” according to the report. “Blue Cross Blue Shield continued to be present in nearly every market in our sample (37 of 43 markets).”
Download the entire report here.