As we approach the new year, a recent analysis reveals that health insurance premiums for individuals purchasing coverage through Healthcare.gov or state-based marketplaces are projected to increase dramatically. According to a report released by KFF, a nonpartisan health policy research organization, the average cost of premiums for those enrolled in Affordable Care Act (ACA) plans will surge by an astonishing 75% in 2024.
During the summer months, health insurance companies finalize their rates for the upcoming January and submit these figures to state regulators. Researchers at KFF meticulously review these filings, which typically span hundreds of pages, filled with complex calculations and projections. Cynthia Cox, a leading researcher at KFF, explains that while these documents often contain intricate math, they also include narratives that justify premium increases.
This year, however, rather than citing traditional factors like escalating drug prices or hospital costs, many insurers are focusing on changes in federal policy. Specifically, the impending expiration of enhanced premium tax credits within the ACA markets is a significant concern. These marketplaces are essential for individuals who lack access to employer-sponsored health insurance and do not qualify for Medicaid or Medicare.
Enhanced subsidies were introduced during the COVID-19 pandemic under the Biden administration, resulting in substantial reductions in premium costs for many consumers. This financial relief proved to be popular, leading to a surge in enrollment. According to Cox, the number of individuals signing up for health coverage has more than doubled, with enrollment reaching an all-time high of 24 million in January. This unprecedented enrollment helped lower the uninsured rate to its lowest point in history.
However, as these subsidies are set to expire in 2024, premiums are expected to rise sharply. For instance, a person currently paying $60 a month for their health insurance could see that amount jump to approximately $105 monthly next year. As a result, many generally healthy individuals might reconsider their options, possibly opting to forgo health insurance altogether due to the higher costs.
The Congressional Budget Office has projected that allowing the subsidies to lapse could increase the number of uninsured individuals by 4.2 million. If healthier individuals choose to opt out of the insurance market, the remaining pool will predominantly consist of those with higher healthcare costs, such as individuals with chronic conditions or necessary medications. This shift in the insurance demographic is prompting companies to raise premiums, anticipating a sicker market in the coming year, as explained by Cox.
While Congress has the option to extend the enhanced subsidies, such a move would likely require support from President Trump and Republican lawmakers—an unlikely scenario. The Republican Study Committee's fiscal budget for 2025 argues that these subsidies merely contribute to a cycle of escalating premiums and federal bailouts, which ultimately burden taxpayers. Senator Bill Cassidy, R-La., who chairs the Senate's HELP Committee, has previously advocated against extending these subsidies, suggesting they obscure the unsustainable rise in Obamacare costs.
Cox notes that a significant number of the newly insured individuals in recent years reside in Republican-leaning regions. States such as Texas, Florida, and Georgia have experienced notable growth in their ACA marketplaces. However, this trend may reverse if increased premiums push people out of coverage, highlighting a critical intersection of healthcare policy and political dynamics.
In summary, the upcoming spike in health insurance premiums is a pressing concern for millions enrolling in ACA plans. With the potential loss of enhanced subsidies, the landscape of health insurance in the United States could significantly shift, impacting both coverage rates and the overall health of the insured population.
