Health insurance premiums set to rise

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If you plan to purchase an individual health insurance plan for 2023, prepare to dig deeper into your wallet. The cost of a health insurance plan is expected to surge during this fall’s open enrollment period, according to a report in the Wall Street Journal.

Open enrollment for 2023 coverage begins on Nov. 1 and runs through Jan. 23, 2023.

Earlier this summer, the Kaiser Family Foundation reviewed proposals by 72 insurers that participate in the federal health insurance marketplace in 13 states. The review found that the insurers were proposing an average 10% increase in premium costs, with some proposals climbing as high as 20%.

The individual states still have to review and approve these requests, with final decisions made by early October. But higher rates are a good bet for next year’s coverage.

“It appears that insurers are looking for steeper rate hikes than in recent years,” says Deb Gordon, co-director of The Alliance of Professional Health Advocates, an independent group of health and care advocacy professionals.

Why are health insurance costs increasing?

Gordon says a Peterson-KFF Health System Tracker analysis found that two recent trends are driving health insurers to request higher rates:

Rising rates charged by hospitals and doctors
An increase in the number of services patients are using

She characterizes the combination as “a double whammy on cost increases.”

“Basically, the proposed premium increases reflect insurers’ experience and projection that their costs are going to go up,” she says.

The Wall Street Journal says health providers and hospitals are charging higher prices for health care services to cover an increase in labor costs and other expenses.

In addition, many health care providers are trying to dig out of a financial hole they fell into during the pandemic, Gordon says. Even though providers were inundated with COVID-19 cases, many other services drew to a halt.

“They were not performing elective knee surgeries or other procedures which tend to be financially lucrative,” she said. “Patients stayed away if they could, so just a lot less care happened during the pandemic.”

The inflation that is surging through the U.S. economy also plays a role in the move toward higher health insurance costs, Gordon says. Rising prices “can definitely affect the cost of supplies and labor in health care, just as they do in every other sector,” she says.

Finally, policy changes, such as the passage of the No Surprises Act — which holds insurers more accountable for capping consumers’ out-of-pocket costs — could add to costs for insurers, Gordon says.

“That means the insurer has to pay for medical bills they previously would have denied,” she says.

Why increasing costs might not impact you

While rising health insurance costs are always worrisome, there is some good news: Millions of people who purchase coverage on the health insurance marketplace shouldn’t feel the sting of higher costs thanks to federal subsidies that reimburse the cost of health insurance.

“People with subsidies are largely protected from the full effect of premium fluctuations,” Gordon says.

Earlier this summer, Congress passed the Inflation Reduction Act, which included a provision to extend premium cost relief through 2025.

The IRA extended an expansion of subsidies that went into effect in 2021. Those who earn more than four times the federal poverty level – about $54,000 for an individual and $110,000 for a family of four – are eligible for subsidies.

“The vast majority of marketplace enrollees qualify for subsidies,” Gordon says.

However, the news is not quite as good for people who do not qualify for subsidies. They will feel the sting of rising health insurance costs.

“People with higher incomes are the ones who are harmed by these increases,” says Adria Goldman Gross, CEO and founder of MedWise Insurance Advocacy and MedWise Billing, a firm dedicated to medical insurance advocacy.

Ways to save on health insurance

If you hope to save money on health insurance, taking one step is particularly important.

“The most important thing consumers can do to lower their health insurance costs is to apply for subsidies on the marketplace,” Gordon says. “Many people don’t realize that they qualify.”

There are other ways to cut the cost of health insurance. One of the best is to purchase an HMO health insurance plan with a high deductible, Gross says.

“The higher the deductible, the lower the premium,” she says of such policies.

Just as importantly, purchasing high-deductible health insurance — defined as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family — makes you eligible to contribute to a health savings account, or HSA.

Contributions to this type of account are tax-deductible, the money grows tax-free and you don’t pay taxes if you use the money for qualified health expenses. Basically, you probably won’t ever pay taxes on this money.

However, the drawback of a high-deductible plan is that you have to pay out of pocket for thousands of dollars in health expenses each year before your health insurance kicks in. For that reason, high-deductible health insurance mostly makes sense for those who are healthy and don’t need a lot of medical care.

Consider catastrophic health insurance

If you are under the age of 30, you can save money by purchasing catastrophic health insurance. This type of coverage has low monthly premiums, but a very high deductible.

With these plans, patients accept they must pay much of the cost of routine care out of pocket, but have the peace of mind of knowing that their health insurance will pick up much of the cost of care if they are diagnosed with an expensive illness.

Typically, people who buy catastrophic health insurance are healthy and bet that they won’t need much health care during the year.

You also might qualify for catastrophic health insurance if you are 30 or older and have a hardship exemption or an affordability exemption.

If your income is low, you also can cut your health insurance costs by qualifying for Medicaid or the Children’s Health Insurance Program (CHIP). In some cases, this coverage can be free for enrollees.

Finally, if you are under the age of 26, you might qualify to be covered on your parent’s health insurance plan.

You may be able to be covered on your parent’s insurance plan if you’re under 26. This might save you money, and you might have a wider network of health providers and hospitals to choose from if your parent’s plan is especially robust.

Sources:

Centers for Medicare and Medicaid Services. “No Surprises: Understand your rights against surprise medical bills.” Accessed September 2022.

HealthCare.gov. “When can I enroll in 2023 Marketplace insurance?” Accessed September 2022.

Kaiser Family Foundation.“Marketplace Insurers Are Proposing 10% Premium Hikes for 2023 in 13 States and DC, Though Many Enrollees Could Face Much Higher Increases if Congress Doesn’t Extend Enhanced Tax Credits.” Accessed September 2022.

The Wall Street Journal. “Affordable Care Act Health-Plan Premiums Set to Rise.” Accessed September 2022.

Chris Kissell

Contributing Researcher

Chris Kissell is a Denver-based writer and editor with work featured on U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Money Talks News and more.