Health insurance costs are expected to increase for Affordable Care Act (ACA) plans in 2024 due to several factors. A study by KFF shows that insurers anticipate a median 6% rise in premiums, with most increases falling between 2% and 10%. The main reason behind these higher premiums is the rising prices of healthcare services. While health prices typically increase annually, inflation from the broader economy is now influencing the healthcare sector as well. This trend is observed not only in the ACA individual market but also in small-group market filings.
Insurers and healthcare providers usually negotiate contracts for a year or longer, causing medical inflation to lag behind the rest of the economy. Looking forward, many insurers predict that the broader economic inflation will affect the healthcare system, pushing up premiums. The rise in inflation is also impacting insurers’ administrative costs, including staffing. Other factors influencing the premium rates include the end of the public health emergency related to COVID-19. Most insurers expect pandemic-related costs to decrease in 2024, slightly reducing premiums.
Some people who were disenrolled from Medicaid might enroll in ACA marketplaces, potentially affecting premiums. The use of diabetes and weight-loss drugs is also driving up pharmaceutical spending for insurers. The Inflation Reduction Act (IRA) is extending enhanced subsidies through 2025, lowering premium costs for many consumers in the market. While most enrollees receive subsidies and don’t pay the full premium, these premium increases can still impact federal spending. The factors driving these increases reflect the broader trends influencing healthcare costs in 2024.
