TL/DR –
The rising health insurance costs in the US have resulted in affordability issues for millions of Americans, with high expenses being a top financial worry for adults and families. Two key factors contributing to this situation include the failure of Congress to extend the enhanced advance premium tax credits, and ACA insurers raising rates as high as 15% for individuals and small-group plans. The reductions in tax credits and the cuts in Medicaid funding due to policy changes are likely to exacerbate the issue, leading to the concern that insurance, especially ACA plans, will become increasingly expensive as healthy people drop their coverage and sick people remain.
Mounting Health Insurance Costs Concerning Millions of Americans
Affordable health insurance remains elusive for millions of Americans, hampering their ability to cover healthcare costs for themselves and their families. The rising healthcare costs and expensive health insurance have been focal points in reports from the New York Times, CBS News, and The Boston Globe.
Health insurance and healthcare costs, as noted by the Kaiser Family Foundation, continue to burden Americans. The costs not only influence insurance decisions but also when individuals seek care.
Factors Elevating Health Insurance Costs
Increasing health insurance costs can be attributed, in part, to Congress’s failure to extend the enhanced advance premium tax credits (APTCs) that facilitated 22.4 million Americans’ enrollment in subsidized health insurance plans under the Affordable Care Act (ACA). Additionally, ACA insurers have raised rates by up to 15% for individual and small-group plans, as reported by Modern Healthcare.
Medical costs are anticipated to increase by 7-8% this year due to high prescription drug costs and hospital and physician care, leading to an increase in health insurance rates, as explained by the Commonwealth Fund.
Insurers’ Concerns and Reactions
During a recent media briefing, Gerard Anderson, Ph.D., a professor of health policy and management, clarified that rising healthcare costs cause insurers to increase rates. Anderson also highlighted insurers’ fear of people dropping coverage due to premium increases.
Simultaneously, Elizabeth Fowler, Ph.D., a research scientist, pointed to the disruption in health insurance markets due to “historic reductions in Medicaid funding,” which could potentially result in up to 10 million people losing health coverage. This was further compounded by the elimination of enhanced APTCs and nearly $1 trillion cut from Medicaid in the recent budget bill.
Effects of Reduced Insurance Tax Credits
The Inflation Reduction Act of 2022 extended the enhanced APTCs offered under the American Rescue Plan Act through 2025, contributing to a boost in ACA Marketplace plans enrollment, as reported by KFF. However, the 2026 APTC covers less of enrollees’ premiums than last year, causing financial strain for consumers with household income over 400% of the federal poverty level (FPL).
Despite premiums costing significantly more than last year, Gerard Anderson advises securing insurance, especially for those residing in states with extended deadlines, considering the high potential costs associated with serious illnesses.
State and Congressional District Health Plan Rates
Charles Gaba, a researcher at acasignups.net, has estimated insurance payments in each state and in each congressional district based on data from KFF’s Subsidy Calculator and state-based ACA exchange sites. Detailed methodology and state-wise numbers are available on acasignups.net.
Resources
- Setting the Record Straight on Premium Tax Credit Enhancements, Center on Budget and Policy Priorities
- How the American Rescue Plan Will Improve Affordability of Private Health Coverage, KFF
- Enhanced Premium Tax Credits for ACA Health Plans: Who They Help, and Who Gets Hurt If They’re Not Extended, The Commonwealth Fund
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