Some 324 Obamacare insurers across the 50 states and the District of Columbia are proposing a median premium increase of seven percent for 2024, according to an annual analysis by Peterson and KFF.
Growth in health care prices, increased utilization, and the costs of diabetes and weight-loss drugs are among the reasons health insurance companies give for the ongoing rise.
“Among 324 [Affordable Care Act, or ACA] Marketplace participating insurers nationally, premium changes range from a drop of -14% to an increase of 51%, but most proposed premium changes for 2025 fall between about 2% and 10% (the 25th and 75th percentile, respectively),” the KFF analysis states. “Of the 324 filings, 50 insurers proposed decreasing premiums. On the other end of the spectrum, 85 insurers requested premium increases greater than 10%.”
Most people enrolled in Obamacare plans receive a subsidy and are not expected to pay the premium increases themselves, which will drive up taxpayer costs, the KFF study notes.
Inflation, COVID-19
Although health care price increases typically exceed the overall inflation rate, inflation throughout 2021 and 2023 have been so high, that health care price increases appeared modest, states the KFF analysis. In 2024, inflation cooled off, so health care prices went back to outpacing general prices.
Two more factors putting pressure on health care prices are hospital consolidation and labor shortages, say insurers.
Peterson-KFF quotes one insurer, Premera Blue Cross, in Washington. “Many of these [hospital] systems are asking for large increases for services (some requesting double digit annual increases) and have shown a willingness to allow our contracts to expire. Because of the limited competition and regional monopolies some health care providers have achieved, there is reduced market pressure for these systems to innovate new, more efficient practices,” the analysis
Medicaid, COVID-19 Subsidies
On April 1, 2023, states began “unwinding” continuous Medicaid re-enrollment, which Congress mandated in 2020 in response to the pandemic. Since June 2024, 23 million people have been disenrolled because they are no longer eligible, according to KFF.
The enrollees could move to the Obamacare marketplaces, where they might be eligible for federal subsidies. That helped explain the huge growth in Obamacare enrollment last year. Most of the insurers didn’t quantify the impact the unwinding is having on premiums or say the impact is zero.
Some insurers expect diabetic drugs, such as Semaglutide, to put upward pressure on the cost of premiums. Doctors are increasingly prescribing these drugs for weight loss.
Subsidies, Employer Insurance
Pandemic-era enhanced subsidies for Obamacare premiums will continue in 2025, under the Inflation Reduction Act.
Further confirmation of rising health insurance premiums comes from accounting firm PricewaterhouseCoopers International (PwC).
In a published analysis, PwC’s Health Research Institute estimates the cost of health insurance provided by private employers will rise by 8 percent in 2025, the sharpest increase since 2012. The study attributes much of the increase to rising hospital costs.
“Today’s medical cost trend is an urgent call to action for healthcare organizations to rethink their strategies to manage the total cost of care more effectively—a challenge that is inextricably linked to the larger challenge of affordability, defined by the Affordable Care Act as the percentage of a member’s household income used for healthcare expenses,” the PwC analysis states.
Paying Just for Care
One way to avoid paying higher premiums is to pay no premiums at all. Physicians providing direct primary care (DPC) do not involve themselves or their patients in traditional health insurance.
Mark Blocher founded Christian Healthcare Centers (CHC) in Grand Rapids, Michigan in 2017 (see article, page 9). CHC charges a monthly fee for patients in exchange for checkups, timely access to staff physicians, extended visits, health management, and urgent care.
“Most patients, regardless of insured status, end up paying out-of-pocket for all of their health care each year, because 80 percent of what they access is primary care, which is foundational to all other forms of health care,” Blocher said. “Having insurance for this makes as much sense as expecting auto insurance to pay for oil changes and tire rotations.”
Too much U.S. health care spending is used to pay the salaries of people who have nothing to do with patient care, says Blocher.
“Bureaucracy, administration, regulations, rules, compliance, oversight, mandates, and enforcement consume up to 50 percent of what Americans spend on health care, which is $4.7 trillion annually. It robs patients and doctors to pay people with no role in patient care.”
‘Cozy and Profitable Relationship’
“Health plans have a very cozy and profitable relationship with government,” said Twila Brase, cofounder and president of the Citizens’ Council for Health Freedom. “Health plans will never do the kind of rethinking that needs to be done, because it would end their market dominance.
“The American system will not be restored to its patient-centered mission or financial integrity until third-party payment is left behind,” said Braise. “Patients need to pay their own bills. The need for real insurance—affordable indemnity medical policies that pay the patient directly for insurable events and never interfere with treatment decisions—could not be clearer.”
Bonner Russell Cohen, Ph.D., (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research.