SACRAMENTO, Calif. – After putting off routine health care for much of the pandemic, Americans are returning to doctors’ offices in large numbers – a trend that is starting to be reflected in higher insurance rates across the country.
Health insurers in individual markets across 13 states and Washington DC will raise rates by an average of 10% next year, according to a review of rate filings by the Kaiser Family Foundation.
That’s a big increase after premiums remained nearly flat for several years during the pandemic as insurers tried to recoup costs for more people using their policies, alongside sky-high, rising inflation prices for almost everything, including health care.
The rate review included Georgia, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, New York, Oregon, Rhode Island, Texas, Vermont and Washington.
“We’re at a point in the pandemic where people are using health care that might have been put off before,” said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “We have a double whammy right now of people using more care and inflation across the economy.”
In California, state officials announced Tuesday that rates would rise an average of 6% next year for the 1.7 million people who buy coverage through Covered California, the state-run health insurance marketplace. That’s a big jump after years of record low increases, when rate increases averaged about 1% over the past three years.
Increased use of health plans was the biggest reason for the increase, accounting for four percentage points, according to Jessica Altman, executive director of Covered California.
“That’s really the consistent message that other states are seeing as well, and even more so than California,” she said.
About 14.5 million people bought individual health coverage through state marketplaces this year, according to the Kaiser Family Foundation.
That’s a small fraction of the total number of insured Americans, as about 155 million people get their insurance through their employer-sponsored coverage. But Kaiser said the filings for the individual plans are more detailed and publicly available.
The annual open enrollment period for when customers can shop and buy 2023 coverage begins this fall. That’s the main window each year when people in the individual market can buy coverage or change plans.
How much people pay for coverage depends on a variety of factors, including where they live and what type of plans they choose.
The rate hikes come as Congress debates whether to extend financial aid to consumers through the American Rescue Plan – the $1.9 trillion economic aid package passed by Congress last year to combat the economic consequences of the pandemic.
America’s Rescue Plan included significant funding to keep health insurance premiums low for people who buy coverage through state marketplaces.
California gets about $1.7 billion a year from that funding to make sure no one paid more than 8.5% of their household income on monthly premiums.
If that assistance expires at the end of this year, about 3 million Americans — including 220,000 Californians — would likely drop coverage because they can no longer afford it, according to a Covered California analysis.
With no guidance on whether Congress will extend the aid next year, some insurers have responded by proactively raising rates in anticipation of people dropping coverage. The uncertainty accounted for half a percentage point of California’s 6% increase, Altman said.
California officials lobbied hard for Congress to extend the financial aid through the American Rescue Plan. In general, the price of health insurance premiums depends on who is buying coverage. If it is mostly sick people, the premiums are more expensive. If healthier people buy them, the premiums cost less.
Altman said California has been able to keep its rate increases below the national average in part because more healthy people are buying coverage through Covered California than most other states.
She said that’s partly because of a California law that taxes people who refuse to buy health coverage. But she said it’s also good because of subsidies that keep premiums low so more people can afford them.
Altman said that extending federal financial assistance would cost some people out of coverage and “that’s the main concern here.”
“That would be a big step backwards,” she said.
