Californians who buy health insurance through the state marketplace will face an average premium hike of 10.3% next year. This is the first double-digit increase since 2018, according to Covered California officials. They attribute the rise to several factors, including higher health care costs, the end of federal subsidies, and uncertainty in the market.
Over the past few years, insurers have expected annual health care costs to go up by around 8%. This accounts for most of the upcoming increase. However, about 2% of the rate hike is linked to the expiration of federal financial assistance at the end of the year. This change stems from Congress’s decision to cut enhanced premium tax credits that helped over 90% of Affordable Care Act enrollees during the pandemic, when enrollment nearly doubled from 12 million to 24 million.
Jessica Altman, the director of Covered California, expressed concern: “We’ve never seen a drop in affordability like this.” Without renewed subsidies, California could lose around $2.1 billion in financial aid for consumers.
Ariana Brill, a certified health insurance agent, pointed out that if the enhanced subsidies are not renewed, consumers will feel the pressure from two sides: increased rates and reduced assistance. Many of her clients, about 2,600, are already anxious about the financial impact these changes may bring. She warns that some people might switch to cheaper plans, while others could drop their coverage entirely.
Brill emphasized, “For most people, affordability is key. Few can ignore the price.” To counter some of these financial losses, the state is investing $190 million to support those earning up to 150% of the federal poverty level, but this is a fraction of what is needed.
Covered California estimates that around 600,000 people may lose their insurance due to these changes. This could further increase health care costs, as younger, healthier individuals are often the first to drop coverage, leaving sicker individuals to bear the financial burden. Matthew McGough, a policy analyst at KFF, noted, “When healthier people leave, it drives up premiums for those who remain.”
The rise in health care costs isn’t just confined to California. Nationwide, the median premium hike is expected to be 18%, largely due to the loss of subsidies—a critical factor in pushing rates higher. McGough highlighted other contributors, such as rising drug tariffs, inflation, and an aging population that relies heavily on expensive medications.
As uncertainty looms, both consumers and insurers face significant challenges. Understanding these changes and their implications is crucial for anyone relying on these health care options. For more information on how these developments might affect you, you can visit the KFF Affordable Care Act program.
Source link
insurance
