How much and why ACA Marketplace premiums are going up in 2025
In 2025, Affordable Care Act (ACA) Marketplace premiums are set to increase by a median of 7%, continuing the trend from the previous year. Insurers across the U.S. have submitted rate filings to state regulators, highlighting the factors driving these changes. For 2025, a range of factors such as inflation, increased utilization of specialty drugs, and rising healthcare prices are cited as key reasons for the premium hikes. Despite a wide range of proposed changes, most fall between 2% and 10%.
Key Factors Driving Premium Increases:
1. Inflation and Medical Prices: A significant driver of premium increases in 2025 is the rising cost of medical care, which has now overtaken general inflation. Hospitals and healthcare providers are negotiating higher reimbursement rates due to inflation and staffing shortages.
2. Hospital Consolidation and Workforce Shortages: The consolidation of hospital systems and the ongoing shortage of healthcare workers have created inflationary pressures, leading to demands for higher payments from insurers. This lack of competition among providers is also reducing incentives for cost-efficiency.
3. Specialty Drugs, Including Weight Loss Medications: Drugs like Ozempic and Wegovy, used for weight loss and diabetes treatment, are contributing significantly to premium increases. The growing demand for these medications, along with other specialty and biologic drugs, has caused prescription drug costs to rise sharply. Some insurers expect even higher impacts as newer and more expensive drugs become more prevalent.
Minor or No Impact Factors:
• Unwinding of Medicaid Continuous Coverage: The unwinding of Medicaid continuous enrollment, which started in 2023, has had a minimal effect on premiums for most insurers, though a few have reported slight upward or downward impacts.
• COVID-19: The pandemic’s impact on 2025 premiums appears negligible, with most insurers reporting little to no effect from COVID-19-related costs like testing and vaccinations.
• No Surprises Act and Price Transparency: The No Surprises Act, which limits unexpected out-of-network billing, and price transparency efforts have had little to no impact on 2025 premiums according to most insurers.
Overall, 2025 ACA premiums are being driven primarily by economic inflation, rising medical costs, and increasing demand for specialty drugs. While some insurers are proposing rate decreases, the majority are planning increases, with factors like hospital consolidation and high-cost medications adding significant pressure on premiums. These proposed rates will be finalized later in 2024 after a review process.
