Dive Brief:
- Premiums for plans sold on the Affordable Care Act exchanges are expected to grow an average of 7% next year, similar to last year’s growth, according to new research from health policy firm the KFF.
- Insurers cited workforce shortages, hospital consolidation and growing demand for pricey GLP-1 drugs as drivers behind growing costs, necessitating the premium hike, according to the KFF’s analysis of rate filings.
- Most enrollees in the ACA markets receive subsidies and won’t feel the full effect of premium increases. However, higher premiums generally result in higher taxpayer spending on subsidies, researchers noted.
Dive Insight:
The number of Americans in ACA coverage has swelled to record highs this year, in part due to more individuals losing Medicaid as states continue rechecking their eligibility for the safety-net coverage.
Though those people switching to ACA plans have grown enrollment in the coverage, Medicaid redeterminations hasn’t had an impact on individual market premiums, according to the KFF analysis of 2025 rate filings from more than 320 insurers nationwide.
Instead, the growing cost of providing healthcare services has been a prominent driver of premium changes, insurers disclosed in rate filings. Higher inflation has been a major contributor, as has rising hospital consolidation, which a mountain of research has shown results in higher medical costs down the line.
“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,” wrote Washington state-based insurer Premera Blue Cross in its filing, citing “reduced market pressure” from “limited competition and regional monopolies.”
Growing demand for GLP-1s like Ozempic and Wegovy was another oft-cited reason behind the premium increases. Relatively few marketplace insurers cover the drugs for weight loss. However, GLP-1s are still contributing to premium hikes, along with other specialty drugs and biologics like new gene therapies, the KFF found.
The filings are preliminary — 2025 rates will be finalized later this summer — but insurers’ planned changes for next year range from a 14% decrease to a 51% jump compared to this year. Most changes fall between a 2% to 10% increase, according to the research.
Most ACA insurers plan to raise premiums by up to 10% next year
In comparison, the median proposed rate increase was 6% for this year.
Higher premiums could contribute to higher subsidies, the KFF noted. Growing subsidies in the ACA exchanges is already a contentious topic, after more generous federal subsidies put in place during the COVID-19 pandemic are scheduled to continue until the end of next year.
The expiration of the subsidies will hit ACA beneficiaries with much higher premium costs and could cause millions more people to become uninsured, according to Congressional Budget Office estimates. Along with Medicaid unwinding, the subsidies have driven a historic 21.4 million people to sign up for ACA plans this year.
Major insurers offering ACA plans have recently pointed to the exchanges as a key source of top and bottom-line growth, especially as more individuals are removed from Medicaid and look for alternative coverage.
