ACA monthly premiums increased by an average of 3.4% in 2023

Monthly health insurance premiums for Affordable Care Act (ACA) benchmark plans increased by an average of 3.4% in 2023, while growth in the number of insurers offering Marketplace plans slowed somewhat. This is the main finding of a new analysis prepared by the Urban Institute, with funding from the Robert Wood Johnson Foundation.

The premium increase reverses a national trend of annual premium reductions from 2019-2022. Researchers point to persistent inflation that drove overall healthcare costs upward, along with uncertainty regarding whether the ACA’s enhanced premium tax credits would be extended, as primary drivers of the increase in premiums.

The analysis noted that premiums for benchmark plans—the second lowest-cost silver plan in the ACA Marketplace—are greatly affected by the competitiveness of healthcare markets. In areas with a single insurer, premiums were an average of $128 higher than those with five or more insurers. Increased competition in urban regions kept benchmark premiums lower than in rural areas. Additionally, states that expanded Medicaid eligibility in accordance with the ACA saw smaller premium increases.

“The national increase in Marketplace benchmark premiums was mainly due to the strong economy and related inflationary pressures, the overall increase in healthcare costs, and potential uncertainty about a changing risk pool,” said John Holahan, institute fellow at the Urban Institute.

“Marketplace premium increases were relatively modest in part because healthcare inflation has lagged other sectors, a situation which may well change,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “While competition creates some welcome downward pressure on premiums, the expansion of the Premium Tax Credits has been the most critical factor driving the significant enrollment growth we have seen in the last two years.”

Read the report "Changes in Marketplace Premiums and Insurer Participation, 2022-2023."