Democrats' 11th-hour scramble to avoid steep Affordable Care Act premium increases for enrollees next year glosses over the reality that premiums are going up regardless for many people, thanks to the steady upward march of health care prices.
The catch: If the Democrats succeed, most ACA enrollees won't notice the premium hikes — which preliminary filings suggest will be around 10% — thanks to the law's subsidy structure, which passes the tab along to the federal government.
- But enrollees who don't qualify for federal help certainly will, and experts say the factors driving the increases are likely to show up in employer-sponsored coverage, too.
Driving the news: Most health insurers in the individual market are seeking median premium increases between 5% and 14% in 2023, according to a Kaiser Family Foundation survey of preliminary filings from 72 health plans across 13 states and the District of Columbia.
- The increases have less to do with COVID-19 or federal policy changes than rising prices paid to hospitals, doctors and drug companies and and the expectation enrollees will be using more health services, KFF said.
- The rate hikes would follow several years of flat premiums in ACA markets.
- Final rates won’t be firmed up until the fall, and states could still pare back some of the insurers' requests.
Go deeper: ACA coverage has been a focal point in Congress after Democrats' coronavirus relief package last year made premium assistance more generous and expanded eligibility to more middle-income Americans, but only temporarily.
- Families covered in marketplace plans pay no more than 8.5% of their income on health insurance.
- Democrats are rushing to cut a deal that could extend the beefed-up assistance for two years and forestall a subsidy cliff that could surge the uninsured population at the end of this year.
- Some healthier people could exit the individual markets if the enhanced subsidies expire, leaving a sicker pool of enrollees that could drive costs higher, said Cynthia Cox, vice president at KFF.
KFF's survey found the political machinations won’t have as much of a bearing on health costs as increased demand from consumers who deferred care during the pandemic, and surging labor and supply costs.
- Many insurers are projecting an upward cost trend of 4 to 8%, driven by more demand for services and higher payments to hospitals, doctors and drug companies.
- Most of the carriers didn't break out their big cost-drivers in the rate filings, though experts anticipate strong demand for mental health services and telemedicine in some specialty areas.
The other side: Insurers say Congress holds the key to whether individual coverage remains affordable for nearly 20 million people.
- "If Congress does not take action to extend the American Rescue Plan Act enhanced subsidies, this will be the greatest factor impacting affordability of out-of-pocket premiums for plan year 2023," said David Allen, a spokesperson for America's Health Insurance Plans.
Reality check: ACA marketplaces have been stable and profitable for insurers, even if individual market enrollees tend to be sicker than they were pre-ACA.
- Insurers were largely insulated from COVID-19's toll, in large part because people delayed other care. Carriers that had to pay more medical claims raised premiums on employers and consumers.
- KFF found the pandemic will have a neutral or slight impact on health costs and premiums, mostly driven by costs associated with administering vaccines and boosters.
- Inflation in the health care sector has not grown as fast as in the rest of the economy, a June Kaiser analysis found, but insurers are concerned how long this holds.
Our thought bubble: Washington has generally been reluctant to tackle rising health care costs, which would require taking on powerful industry interests.
- Democrats' push to lower drug prices is the highest-profile exception, and their renewed effort to allow a modest version of Medicare negotiations with drugmakers will serve as a test of their resolve.
