The Affordable Care Act Marketplaces opened for signups on Tuesday, Nov. 1, marking the 10th year that consumers can buy health insurance under the ACA. Overall, consumers will see a modest uptick in premiums for the lowest-cost plans in each of the Bronze, Silver, and Gold metal levels on the federal Marketplace, according to an Oliver Wyman Actuarial analysis.
Oliver Wyman utilized data from the Centers for Medicare and Medicaid Services to calculate rate changes relative to 2022 premiums for the 33 states on the federal Marketplace. We looked at the lowest-cost bronze (LCB), lowest-cost silver (LCS), second-lowest-cost silver (SLCS), and lowest-cost gold (LCG) plans by county and calculated the weighted-average rate change at each of those plan levels by state. These specified plan levels are important to consumers because they represent the lowest-cost plan at each of the specified metal levels that an individual or family seeking coverage through the federal Marketplace has access to, and the SCLS plans represent the benchmark premiums on which federal premium tax credits are based.
Across all 33 states, the calculated average rate changes are:
- LCB: +3.3%
- LCS: +4.5%
- SLCS: +4.2%
- LCG: +0.8%
A summary of the calculated state-level average LCB, LCS, SLCS, and LCG rate changes is provided in the below map.
The 2023 average rate changes for the LCB, LCS, SLCS, and LCG plans vary by state and county, in some cases by a significant amount. Virginia has the lowest average rate changes across all of the specified plan levels, ranging from -20.4% for its LCS plans to -17.2% for its LCG plans, due primarily to the introduction of a new state-based reinsurance program that goes into effect on January 1, 2023, and has a target of reducing premium rates by up to 20%. Utah is experiencing the highest average rate changes at the LCB and LCG plan levels of +14.7% and +12.3%, respectively, while South Carolina is experiencing the highest average rate changes at the LCS and SLCS plan levels of +11.6% and +11.5%, respectively; in both states, the high observed rate changes appear to be driven by rate actions being taken by specific carriers within those states.
Nationwide, the average rate changes are relatively moderate. Some reasons for this likely include:
- Entrance of new carriers in some markets, more aggressive pricing by certain carriers that historically have not had significant market share, and an overall focus on competitive pricing for the lowest-cost metal plans in a given rating area (in order to capture or retain market share). The changes in the lowest-cost metal plans and SLCS plans for the 33 healthcare.gov states are generally lower than the average rate changes that would be observed if all current Marketplace enrollees in these states were to remain in the same plans they had in 2022.
- This is the 10th ACA pricing cycle that has occurred since 2014; as a result, carriers have a much better feel for what the average morbidity of the single risk pool will look like on a year-to-year basis as well as how the federal risk adjustment program will impact their financial results.
- Congress extended through 2025 the enhanced premium tax credits that first went into effect under the American Rescue Plan Act in 2021, leading to an expectation that the morbidity of the single risk pool in 2023 will likely either be stable or even improve relative to recent prior years as more individuals understand how affordable coverage can be, especially at lower incomes, in the individual market.
One final item to note is that the changes in rates for the LCG plans are, on average, approximately 3.4% lower than the changes in rates being observed for the SLCS plans. A number of factors could be driving this result, but two reasons stand out: there has been an increased emphasis by some states to have carriers increase the CSR loads on their silver plans in order to maximize premium tax credits, and there has been a tightening of rating policy in some states in terms of the magnitude of induced utilization adjustments that carriers are allowed to apply at the richest metal levels when setting their rates. This result is important because, in general, the lower that LCG plans are priced relative to SLCS plans, the more likely it is that Marketplace enrollees will have access to either free or low-cost gold plans, especially at lower-income levels.