There are a number of factors that will impact health insurance premiums in the individual and small group markets in 2023.
One of the main drivers of increased premium cost-share to the policyholder will be the possible end to enhanced subsidies on Affordable Care Act (ACA) exchange plans. COVID-19 came with a cost as well, the least of which were the millions of “free” shots. Lastly, the highest inflation in over 40 years will certainly add to the bottom line.
As part of the American Rescue Plan the Biden administration upped the premium assistance for millions of individuals purchasing ACA individual plans in 2022, with most paying a small portion of the actual monthly premium. The increased premium assistance was for one year only and is scheduled to end December 31st, 2022.
If the enhanced subsidies do end many individuals and families may find an affordable alternative in Arizona short term health insurance policies that lock-in coverage for 1 month to 3 years.
Many of the record number of individuals that took advantage of the increased premium assistance were healthy individuals. Once they see that their premium will increase by hundreds of dollars per month in 2023 due to the end of the enhanced subsidies it is expected that they will drop coverage. As healthier individuals leave the risk pool, less healthy individuals remain. Less healthy risk pools result in higher premiums.
Whether individuals will see a spike in premiums in 2023 comes down to the actions of Kristen Sinema. The Biden administration struck a deal with Joe Manchin to create legislation that will, in part, fund the expanded premium assistance program for 2023. But part of the new legislation proposal includes tax increases that Sinema opposes. Without her vote the new legislation won’t pass.