Understanding Health Insurance Premium Increases 2023

Health insurance premium increases can be a significant financial burden, but understanding the reasons behind them can help you prepare and make informed decisions about your coverage.

Many insurers are expected to raise their premiums in 2023 due to increasing healthcare costs.

One of the main drivers of premium increases is the rising cost of prescription medications.

According to industry estimates, prescription medication costs are projected to rise by 10% in 2023.

For your interest: Medigap Premium Increases

Premium increases are a major concern for many Americans, and the numbers are staggering. Across the country, premiums are rising by an average of 15% across 100 insurers.

In some states, the increases are even more dramatic. Colorado, for example, is facing an average rate increase of 28%, the second-largest hike since the Affordable Care Act (ACA) was implemented. Pennsylvania is also seeing a significant increase, with a 19% statewide average premium increase.

Here are some key statistics on premium increases:

Premium increases are a reality for many Americans, and the numbers are staggering. Across 100 insurers, premiums are rising by a median of 15%. This means that people who buy health insurance on their own can expect to pay significantly more.

In Colorado, more than 300,000 people are facing an average rate increase of 28%, the second-largest hike since the ACA was implemented. That's a huge jump, and it's not just Colorado that's affected - Pennsylvania is facing a 19% statewide average premium increase.

Experts are attributing these increases to uncertainty about economic policy, the Republican reconciliation bill, and tariffs that could raise prices on drugs, medical equipment, and supplies. These factors are driving up costs for insurers, which they're then passing on to policyholders.

Here are some key statistics to keep in mind:

These increases are not just a problem for individuals buying health insurance on their own - they'll also drive up costs for those who get health insurance through their employer. As people become uninsured, they'll seek care in emergency settings, driving up costs for everyone.

I've seen firsthand how premium increases can affect people's budgets. Monthly premiums in New York are estimated to range from $480 to $750 per month.

A 40-year-old living in New York City can expect to pay around $480 to $530 per month for a HMO Bronze Plan. This can be a significant expense, especially for those on a tight budget.

In contrast, a self-employed individual in Buffalo might pay less, around $430 to $500 per month, for a HMO Silver Plan. This is still a notable expense, but potentially more manageable for those with a steady income.

Here are some estimated monthly premium ranges in New York, based on 2025 market data:

These estimates highlight the importance of considering individual circumstances and plan types when evaluating premium increases.

Medical care costs are rising every year due to new and often expensive diagnostic and treatment technologies. This is leading to higher premiums for policyholders.

Rising hospital and provider fees are another significant contributor to increasing medical care costs. These costs are then passed on to insurers, who in turn pass them on to policyholders.

Higher prices for brand-name and specialty prescription drugs are also driving up medical care costs. This trend is impacting what insurers must pay out and is a major factor in premium increases.

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Medical technology costs are a significant factor in rising medical care expenses. New and often expensive diagnostic and treatment technologies are developed every year, driving up costs.

These technologies can be life-changing, but they come with a hefty price tag. For example, advanced imaging machines and robotic surgery systems are just a few examples of the many technologies that have improved medical care, but also increased costs.

New technologies are not the only contributor to medical tech costs. Rising hospital and provider fees also play a significant role. These fees can add up quickly, especially for those with complex medical needs.

Here are some of the key factors driving medical tech costs:

Older adults naturally use more healthcare services, which can drive up premiums. This is one of the demographic factors that influence premiums.

High-utilization groups, such as people with chronic conditions, raise average claim costs. This can result in higher premiums for everyone in the group.

Age-banded pricing allows higher rates for older enrollees, but they are still community-rated within limits in New York. This means that older adults are charged more, but not unfairly.

In the individual and small group markets, age-banded pricing is used to account for the higher healthcare needs of older adults. This is a way to balance the costs of covering older adults with the costs of covering younger, healthier individuals.

Community rating and risk pooling are used in New York to promote fairness in insurance premiums. This means that insurers must offer the same premium to everyone in a geographic area, regardless of health status.

For more insights, see: Is Age a Factor in Increased Umbrella Insurance Premiums

The larger and more diverse the insurance pool, the more stable the rates. This is because a larger pool of people spreads the risk of covering high-cost enrollees.

Adverse selection can drive costs up when healthier people opt out of the insurance pool. This means that only the sickest and most expensive individuals are left in the pool, driving up costs for everyone else.

Avoiding unnecessary increases in your health insurance costs requires some planning and research.

Don't auto-renew your plan without reviewing it first, as plan designs and rates can change from year to year. This could leave you overpaying for coverage you no longer need.

Choosing a plan that includes your preferred doctors and hospitals can save you money in the long run by reducing out-of-network exposure.

Bronze or Silver tiers might be a better fit for your needs than a more expensive Gold tier, especially if you're relatively healthy.

Evaluating your eligibility for subsidies through programs like the NY State of Health marketplace or public programs like the Essential Plan can help you save even more.

Here are some key points to keep in mind:

Thought inflation was a real concern in the past, but was it really as bad as we thought? The answer is yes, it had a significant impact on the economy.

The 1970s saw a sharp increase in prices, with inflation rates reaching as high as 14.8% in 1980. This had a ripple effect on people's purchasing power and savings.

The value of money decreased dramatically, making it difficult for people to afford basic necessities.

The inflation rate peaked in 1980 and then began to decline, but not before it had a lasting impact on the economy and people's financial stability.

Insurance companies are talking about federal policy as the reason for premium increases, specifically the expiration of enhanced premium tax credits in the ACA markets.

This change could price people out of coverage, especially in Republican strongholds that have seen significant growth in their ACA marketplaces, like Texas, Florida, and Georgia.

The Congressional Budget Office estimates that 8.2 million people who get ACA insurance now will become uninsured over the next decade due to the expiration of the enhanced tax credits and other changes made to the marketplaces.

A fresh viewpoint: What Are Tax Credits on the Health Insurance Marketplaces

Each year, insurers in New York submit premium rate filings to the Department of Financial Services (DFS). The DFS can approve, reduce, or reject requested increases based on claims data, administrative costs, and market trends.

Insurance companies in New York typically file hundreds of pages of documents with the DFS, which can be overwhelming to navigate. These filings are usually filled with math and equations, but sometimes they also include a narrative to explain why premiums are being raised.

The DFS reviews these filings to understand how premium rates will be affected by factors like claims data and market trends. This process is crucial in determining how much consumers will pay for health insurance.

Insurance companies are now talking about federal policy, specifically the expiration of enhanced premium tax credits in the ACA markets, when explaining their premium increases. This shift in focus is a notable change from previous years.

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Colorado Insurance Commissioner Michael Conway called on Congress to restore the tax credits, which expire December 31. This could help mitigate the impact of premium increases on 321,000 Coloradans.

The resulting premium increases will be significant, with some insurance companies requesting rate hikes of up to 36 percent. Average rate increases range from 15 percent to 23 percent.

In many states, rate filing data won't be public until August, but ACA Signups has been tracking those rates and reports hefty hikes in states like Maine, Illinois, and Connecticut.

About 112,000 people in Colorado could lose health insurance due to changes enacted by the new law, according to the marketplace. This number represents 43 percent of those now enrolled via Connect for Health.

Congress had a chance to fix this problem in the reconciliation bill, but they chose not to. Now, insurance companies are left with little choice but to raise rates.

The expiration of the subsidy enhancements will reduce the number of people with coverage, and the people who drop their coverage will likely be the healthiest ones.

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Colorado's state leaders are sounding the alarm about the upcoming health insurance premium increases. Sen. Michael Bennet called out the Republicans' budget bill, saying it "gutted Medicaid to pay for tax cuts for the wealthiest Americans."

The state's hospitals are "deeply concerned" about the rate hikes, which they attribute to the expiration of federal subsidies and a weakened reinsurance program. This program helps backstop insurers by paying a portion of high-cost claims.

The loss of the additional financial assistance will account for nearly 8 percent of the average premium increase Coloradans will see. The state estimates that the average premium increase would have been 20 percent instead of over 28 percent if the funding shortfall for the Reinsurance Program hadn't occurred.

Mannat Singh, Executive Director of the Colorado Consumer Health Initiative, blames the GOP administration and members of Congress for the increase in rates. Insurance carriers are "reaching for the highest possible profit at individual consumers' expense."

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In New York, premium increases have been significant over the past decade, with annual hikes ranging from 4% to over 9%.

The state's Department of Financial Services has approved average increases in both the individual and small group markets. In 2023, DFS approved average increases of 9.3% in the individual market and 7.4% in the small group market.

These numbers are a good reminder to review your plan options annually, as the trend suggests that premium increases can be substantial from year to year.

In 2022, approved increases averaged 9.7% for individuals and 7.6% for small groups, showing that the trend of significant premium increases continues.

Here's a look at the average premium increases approved by DFS in New York for the individual and small group markets in recent years:

Health insurance companies set their rates for the following January during the summer months. This is when they submit those rates to state regulators.

Summer is a crucial time of year for health insurance companies, as it's when they determine their rates for the upcoming year. They use this time to assess various factors and make informed decisions.

Insurers take a significant amount of time to review and analyze data, which is why they often submit their rates to regulators in the summer. This allows them to make adjustments and ensure their rates are accurate.

The insurers' narrative highlights the importance of summer in the health insurance rate-setting process. It's a critical time that can have a lasting impact on consumers.

Additional reading: Time Limit to Submit Health Insurance Claim Bcbs