Competition pushes down Marketplace health insurance premiums

Tax credits a factor for future insurance rates.

More competition has pushed down prices for health insurance premiums in most states in 2022, the third straight year of decreases.

Meanwhile, if federal tax credits expire this year for health insurance purchased through the Affordable Care Act Marketplaces, an estimated 3.1 million people would be uninsured in 2023. But keeping the credits would increase the federal deficit by $305 billion over the next 10 years.

The figures were included in two recent studies by the Urban Foundation, a Washington-based nonprofit research organization.

Health insurance premiums

Health insurance premiums in the Affordable Care Act Marketplaces declined in most states as premiums rose in employer-sponsored plans, according to the Urban Foundation.

From 2021 to 2022, national average benchmark premiums fell 1.8%, with 32 states posting benchmark premium reductions and 18 with increases. Florida had no change, according to the Urban Institute.

Those decreases followed premium reductions of 1.7% in 2021 and 3.2% in 2020. Employer-sponsored health insurance premiums rose by 3.6% in 2021 and 3.9% in 2020.

“Premium prices varied considerably across states,” the study said. There were 11 states posting average benchmark premiums above $500 a month, and six states with premiums below $365 a month, based on a 40-year-old nonsmoking insured.

Variations depended on types and numbers of insurers, along with unemployment rates. The study used the jobless rate as a proxy for the severity of COVID-19 outbreaks in rating regions, leading to higher premium increases based on more job losses.

More insurers in 2022 “had a strong negative effect on benchmark premium increases,” the study said.

Tax credits

The American Rescue Plan Act of 2021 increased premium tax credits for Marketplace coverage. Eligibility for the tax credits expanded to people with incomes above 400% of the federal poverty levels.

The tax credits are set to expire after 2022. If they are not extended, the researchers predicted individuals and families enrolled in Marketplace coverage would “pay hundreds of dollars more per person each year in premiums,” in some cases, about $2,000 more per year.

Largest coverage losses will be among the non-Hispanic Black population, young adults and people with incomes between 138% and 400% of the federal poverty level, the study said.