ICHRA plans will see rates rise by 9% or more. Who will pay the increase, plan sponsor or plan member?
ACA premiums set to rise 9% Or More in 2025
SOURCE: ACA Premiums
Growing demand for GLP-1 drugs like Ozempic and Wegovy and hospital consolidation could help drive up the cost of Affordable Care Act coverage next year by 9% or more, according to a preliminary review by the Peterson Center on Healthcare and KFF.
Why it matters: While most enrollees in the market get subsidies and won’t have to foot the added bill, premium increases generally result in higher federal spending on subsidies, the analysis notes.
What they found: Rate filings by 61 insurers across 10 states and D.C. show ongoing hospital consolidation and workforce shortages are having an inflationary effect on premiums.
- So, too, is the explosion in demand for drugs used for diabetes treatment and weight loss.
- Though few ACA plans cover drugs that are approved only for weight loss, several insurers singled out GLP-1s as a driving force behind premium increases for 2025.
- The analysis notes insurers are using strategies like prior authorization, step therapy and limiting quantities to control demand of Ozempic and other GLP-1s that are approved for diabetes but have potential for off-label use to lose weight.
- Specialty drugs and biologics, including pricey gene therapies, are also becoming more prevalent and driving premiums upward.
Most insurers say ongoing state Medicaid redeterminations, COVID-19 treatment and tests and the federal surprise billing ban are not having a major effect on 2025 premiums.
Context: Last year, insurers proposed rate increases for 2024 coverage that were between 2% and 10%, with a median increase of 6%, Peterson-KFF notes.
- This year’s detailed review of factors driving premium changes for 2025 found insurers have somewhat higher proposed rate increases, with a median of 9%.
- The basis for the federal subsidies is the percent change in the benchmark ACA silver plan.
The bottom line: Medical inflation has picked up and now exceeds the growth of non-medical prices — a big change from 2021 to 2023. ACA plans are adjusting to keep pace and reflect their higher costs and overhead.
