ACA Marketplace Premiums Projected to Increase by 10% in 2023

Affordable Care Act (ACA) marketplace premiums will increase by five to ten percent in 2023, with payers attributing premium growth to rising healthcare prices and utilization rates, according to preliminary data from the Kaiser Family Foundation (KFF).

The Peterson-KFF Health System Tracker reflects preliminary rate filing data from 72 insurers across 13 states and the District of Columbia. Payers will finalize their rates in late summer.

The median proposed premium increase across the plans was ten percent, researchers found. Most insurers (68 insurers) requested premium increases, while only four insurers requested to lower their premiums for 2023.

Twenty-one insurers reported a premium increase of five to ten percent for 2023. Fifteen insurers said their premiums would increase by ten to 15 percent, while another fifteen said premiums would increase by zero to five percent.

Reported premium increases of more than 15 percent were less common. Still, nine insurers proposed a 15 to 20 percent increase, three projected a 20 to 25 percent increase, and five reported that 2023 premiums would increase by more than 25 percent.

Researchers noted that the actual average percent increase in premiums will not be known until early fall. In addition, the overall average increase in premiums will likely differ from the average increase in the benchmark silver plan, which determines subsidy amounts for Marketplace enrollees.

Insurers reported that rising prices paid to hospitals, doctors, and drug companies and utilization trends will account for four to eight percent of their premium growth in 2023. Also known as health cost trend, this factor is typically a primary driver of premium growth, researchers said.

The COVID-19 pandemic will likely impact premium amounts, insurers reported. Similar to 2021 and 2022, some payers said the pandemic would have an upward effect on premium rates, while others projected a downward effect.

Rising hospitalization and vaccine administration costs may drive upward effects, while reduced healthcare utilization may lead to downward impacts.

Among payers that quantified the pandemic’s impact, most reported a positive or negative change of one to two percent.

Policy changes at the federal level will also impact premium changes in 2023.

The potential expiration of the American Rescue Plan Act (ARPA) subsidies is perhaps the most significant policy change, the report stated. The regulation increased premium subsidy amounts and expanded eligibility for higher-income people. However, the subsidies are set to expire at the end of 2022.

Around half of the insurers said the ARPA subsidy expiration would impact 2023 premiums. Some insurers predicted it would have a neutral impact on premiums, while others projected a slight upward impact on premium costs.

“The population that is most likely to drop without these enhanced credits have better morbidity and substantially lower cost than those unlikely to move,” one respondent, Excellus Health Plan, said. “This shift in the population would impact both expected claims and risk adjustment amounts.”

Experts have predicted that the uninsured population will increase by more than 3 million if policymakers do not extend the ARPA premium subsidies.

A couple of insurers mentioned other policy changes, including the implementation of the No Surprises Act and the Family Glitch fix. However, respondents did not note significant impacts on premium growth resulting from these changes.

“After a few years of virtually flat premiums in the ACA marketplaces, it appears 2023 rates may rise significantly,” the report concluded. “Although this brief is just an early look at preliminary rate filings, so far, the pattern emerging is that most insurers are requesting premium increases in the high single digits or low double digits.”