Federal aid to limit insurance premium hikes
Average increase for Affordable Care Act plans in Pennsylvania will be 5.5% next year
Pennsylvanians with health insurance through the Affordable Care Act will see an average monthly premium increase of 5.5% starting in January, an increase held down by federal subsidies that were extended in August.
The state Insurance Department on Tuesday said the average rate hike for policies purchased through the state’s online marketplace, called Pennie, was down from an average 7.1% increase that health insurers had sought for 2023. The average rate increase for the small group market will be 5.3%.
For Highmark plans sold throughout the state, with the exception of the Philadelphia area, the department approved a rate increase of 9.1% for 2023. For coverage sold only in the western and northwestern parts of the state, the department approved a 4.3% rate hike.
western and central parts of the state received department approval for a rate hike of 4.42%; for policies sold in most other counties, with the exception of the Philadelphia area, the department approved a 4.17% rate hike.
Limiting premium increases was an extension of premium tax credit funding through the Inflation Reduction Act, which raised the coinsurance rate paid to carriers to 53% from 40%, according to the Insurance Department. The enhanced premium tax credit funding will continue through 2025.
Premium tax credits are based on the applicant’s income and household size. Without the extension approved in August, 40,000 Pennsylvanians would’ve lost all of their subsidy and another 230,000 residents would’ve seen their subsidy reduced, according to an analysis by the U.S. Department of Health and Human Services.
Federal American Rescue Plan funding reduced out-of-pocket premium costs by an average of 9% in 2022.
“The signing of the Inflation Reduction Act in August extended enhanced premium tax credits that were previously afforded through the American Rescue Plan,” acting Insurance Department Commissioner Michael Humphreys said in a prepared statement. “Those credits lowered, and in some cases eliminated, health insurance premiums for thousands of lower and middle income families enrolled in health coverage through Pennie.”
In June, Highmark sought rate increases ranging between 5.3% to 10.3%. UPMC had requested rate increases ranging between 5.21% and 5.51%, according to the Insurance Department.
More than 338,000 people are enrolled for health insurance through Pennie, the state-based health insurance marketplace, and open enrollment to sign up or switch plans is Nov. 1 through Jan. 15. Nine out of 10 consumers qualify for financial assistance for the coverage.