SACRAMENTO, Calif. — After postponing routine health care for much of the pandemic, Americans are now returning to doctor’s offices in large numbers — a trend that is beginning to manifest itself in higher insurance rates across the country.
Health insurers in individual markets in 13 states and Washington DC will raise rates an average of 10% next year, according to a review of rate filings by the Kaiser Family Foundation.
This is a sharp increase after premiums remained virtually flat for several years during the pandemic as insurers seek to recoup costs for more people using their policies, combined with record inflation that is driving up prices for virtually everything, including health care.
The tariff review included Georgia, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, New York, Oregon, Rhode Island, Texas, Vermont and Washington.
“We’re at a point in the pandemic where people are using health care that they may have put off before,” said Larry Levitt, executive vice president of health policy at the Kaiser Family Foundation. “We currently have a double whammy of people using more care and inflation across the economy.”
In California, state officials announced Tuesday that rates will rise an average of 6% next year for the 1.7 million people who buy coverage through Covered California, the health insurance marketplace run by the state. That’s a big jump after years of record increases, when rate increases averaged about 1% over the past three years.
Increased use of health plans was the main reason for the increase, accounting for four percentage points, according to Jessica Altman, executive director of Covered California.
“That’s really the consistent message that other states are seeing as well, and even more so than California,” she said.
According to the Kaiser Family Foundation, about 14.5 million people purchased individual health coverage in public markets this year.
That’s a small fraction of the total number of insured Americans, because about 155 million people get their insurance through their employer-sponsored coverage. But Kaiser said the filings for individual plans are more detailed and publicly available.
The annual open enrollment period for when customers can purchase and purchase 2023 coverage begins this fall. This is the main window each year where people in the individual market can buy coverage or switch plans.
How much people will pay for coverage depends on a variety of factors, including where they live and the type of plan they choose.
The rate increases come as Congress debates whether to expand financial assistance to consumers through the U.S. bailout — the $1.9 trillion economic aid package that Congress passed last year to combat the economic impacts of the pandemic.
The U.S. bailout included significant funding to keep health insurance premiums low for people buying coverage in state markets.
California receives about $1.7 billion a year in this funding to ensure that no one pays more than 8.5% of their household income in monthly premiums.
If that assistance expires at the end of this year, about 3 million Americans — including 220,000 Californians — would likely drop out of coverage because they can no longer afford it, according to an analysis by Covered California.
With no indication of whether Congress will extend assistance next year, some insurers have responded by proactively raising rates in anticipation of the drop in coverage. The uncertainty accounted for half a percentage point of California’s 6% increase, Altman said.
California officials have been pushing for Congress to extend financial aid through the US bailout. In general, the price of health insurance premiums depends on who buys the coverage. If it is mainly sick people, the premiums are more expensive. If more healthy people buy them, the premiums cost less.
Altman said California has been able to keep its rate increases below the national average in part because more healthy people buy coverage through Covered California than most other states.
She said that’s partly because of a California law that taxes people who refuse to buy health coverage. But she said it’s also because of subsidies that keep premiums low so more people can afford them.
Altman said failure to extend federal financial assistance would exclude some people from coverage and “is the main outcome to worry about here.”
“It would be a big step backwards,” she said.
Associated Press health writer Tom Murphy in Indianapolis contributed to this report.