Inflation helped drive up ObamaCare premiums this year

Monthly ObamaCare premiums rose in 2023 for the first time since 2019, driven by inflation and increased health spending, according to a new analysis.

Despite continued growth in the number of insurers offering plans, the monthly premiums for Affordable Care Act (ACA) benchmark plans increased by an average 3.4 percent between 2022 and 2023, according to the analysis by the Urban Institute and Robert Wood Johnson Foundation. 

The national average benchmark premium was $453 per month for a 40-year-old nonsmoker, compared to $438 last year. More than 16 million Americans enrolled in exchange plans in 2023.

“The 2023 increase is likely attributable to the strong economy and rising inflation. Inflation has increased labor costs throughout the economy, and the health care sector is not immune,” the analysis found. “Insurers need to anticipate an increase in claims costs from rising prices.”

But the study found considerable regional variations in pricing. Large urban areas with five or more insurers saw some of the lowest premiums, while people in rural areas and small cities with only one or two insurers paid more.

In regions with only one insurer offering ACA plans, premiums were an average $128 higher than regions with five or more insurers.

Consumers in Wyoming and West Virginia saw the highest benchmark premiums of more than $800.

The study also found uncertainty over whether Congress would extend or make permanent the enhanced premium tax credits. The Inflation Reduction Act extended the subsidies until 2025, but some members would like that to end. 

Extending the subsidies increases the likelihood that healthy people would choose to buy coverage previously deemed unaffordable, and a healthier risk pool should lead to lower premiums.

But overall, competition should dampen premium increases because insurers that want to be competitive can’t risk setting premiums too high, the analysis found.