Here’s Where Health Insurance Costs Are Rising in 2023 and What You Can Do About It
- Health insurance premiums through the Healthcare.gov insurance marketplace will increase nationwide in 2023. Some states will feel the impact more than others.
- Federal subsidies based on income may offset much of the cost of your health insurance premium, but you need to know how to take advantage of these.
- The cost of being without health insurance may be devastating in some cases, so shop around up until January 15 and be sure to take advantage of all subsidies you may be eligible to receive.
Recent data released by Value Penguin, a personal finance and research analysis site, shows that health insurance premiums for private plans purchased under the Healthcare Marketplace, the Affordable Care Act’s official federal health insurance exchange, will increase in 36 states in 2023. Premiums are the amount of money you pay for coverage each month.
A survey revealed that almost 40% of the 1,550 respondents said they might even consider going without health insurance if their premiums become too costly.
Experts warn that forgoing health insurance could lead to tragic health outcomes and greater care costs for all Americans. Here’s where insurance premiums are most likely to increase, and how you can offset costs.
How Much Will Premiums Increase in 2023?
The Average Cost of Health Insurance (2023) report showed the average healthcare insurance premium for a 40-year-old on a silver plan—the most common tier—purchased through the Marketplace will be $560 per month, a 4% increase over last year.
The five states that will see the steepest increase in average monthly premiums for silver plans in 2023 are:
- Georgia: $474—a 20.30% increase from $394 in 2022
- Colorado: $489—a 19.56% increase from $409 in 2022
- Wyoming: $882—a 15.45% increase from $764 in 2022
- Alaska: $822—a 14.97% increase from $715 in 2022
- New Mexico: $551—a 14.79% increase from $480 in 2022
Based on average monthly premiums of silver plans, the five most expensive states to purchase health insurance through Marketplace in 2023 will be:
What Are the Different Tiers of Marketplace Plans?
Marketplace health plans offer four tiers of coverage: Bronze, silver, gold, and platinum. The tiers do not refer to quality of care or type of plan (like HMO, PPO, EPO, etc.), but rather, the amount the plan will cover versus how much you’ll need to pay.
- Bronze plans have the lowest premiums, but the highest co-pays. They are a good option for those who anticipate minimal health expenses or desire coverage for unexpected emergencies only.
- Platinum plans offer the most comprehensive coverage. They have the highest deductibles but the lowest co-pays, and are appropriate for someone who expects a lot of out-of-pocket medical expenses.
- Silver and gold plans offer middle-of-the-road options for those who do not expect extensive medical care but do not want the burden of high out-of-pocket costs in the event of unexpected medical expenses.
Why Does Health Insurance Cost More in Some States?
Many factors explain why private insurance costs vary by state, Divya Sangameshwar, a health insurance expert and one of the researchers of the Value Penguin report, told Verywell
Insurers set premiums based on expectations about who will enroll. A younger and healthier pool of individuals will be cheaper to insure than a more elderly population with chronic health conditions.
Insurance companies also factor in the rates they have been able to negotiate with hospitals, doctors, and other medical providers. Fewer hospitals in a state may mean less competition for favorable rates, translating to higher premiums.
Premiums are expected to rise across the board, but the type of plan you select will affect the bottom line. HMO and PPO plans will be less expensive, while exclusive provider option (EPO) plans will cost more. Platinum, bronze, and PPO plans will see the most significant rate increases in 2023, Sangameshwar said.
Smokers can also expect to pay higher premiums on many plans.
Subsidies Can Help You Save Money
Despite rising costs, many Americans will not pay the full price for policies they purchase through the Marketplace.
The American Rescue Plan (ARP), passed by Congress in 2021 to last through the end of 2025, added or expanded many provisions to relieve the burden of health insurance costs.
The ARP mandates that health insurance premiums may not be greater than 8.5% of a household income. Households earning less than 400% above the poverty level ($54,360 for an individual or $148,760 for a family of six) are capped at a lower percentage of their income. The federal government provides subsidies to help cover the difference.
If you are unsure whether or not your household qualifies for subsidies, you can use the ACA subsidy calculator on Healthcare.gov to see how much you could save.
What if You Have Health Insurance Through an Employer, Medicare, or Medicaid?
If you have coverage under an employer health insurance plan, you may still shop the Marketplace, but if your premium costs less than 9.12% of your household income, you will not qualify for subsidies and will pay full price.
Individuals already covered by Medicare do not qualify for insurance through the Marketplace. Medicaid and CHIP (Children’s Health Insurance Program) beneficiaries may shop for coverage on the Marketplace, but in most cases, they will pay more for a private plan than their current Medicaid benefits.
The Risk of Forgoing Health Insurance
Value Penguin’s survey indicates the majority of Americans—74%—are concerned about how the rising cost of health insurance could impact their households. Two in five respondents said they’d consider canceling their health insurance if it becomes too expensive, putting those funds instead toward savings, paying down debt, retirement, family needs, or investing.
But Timothy Quinn, MD, a family physician in Jackson, Miss., strongly advises against forgoing healthcare coverage. Over the course of his two decades as a doctor, he has seen firsthand the effects of patients not having preventative care or delaying care when they are sick because they do not have health insurance.
“Most chronic medical conditions have little to no symptoms at all in the early stages,” Quinn told Verywell, citing high blood pressure, diabetes, HIV, and cancer as conditions that have optimal outcomes when detected and treated promptly. “Patients have a much higher probability of developing an untreatable scenario resulting in decreased quality of life and possibility of death when they do not get routine healthcare.”
Sarah Collins, PhD, The Commonwealth Fund
An insurance premium is certain, but healthcare costs are uncertain.
— Sarah Collins, PhD, The Commonwealth Fund
Insurance experts and healthcare providers also warn that families who choose not to purchase health insurance may find themselves in an unmanageable financial situation due to uncovered medical expenses.
“An insurance premium is certain, but healthcare costs are uncertain,” Sara Collins, PhD, a senior scholar and vice president for healthcare coverage, access, and health system performance tracking at The Commonwealth Fund, told Verywell. “If someone were to be diagnosed with cancer or end up with a visit to the ER, those would be catastrophic expenses, and a person could be left with costly, unexpected bills.”
What to Do If Your Health Insurance Premium Is Squeezing Your Budget
If, like a third of the Value Penguin survey respondents, you feel that your health insurance premiums are costing too much, experts offer a few suggestions to consider.
Use Marketplace Navigators
Marketplace navigators, accessible through Healthcare.gov, can help you explore options in your state and select the plan that will best fit your needs. They will also help ensure you take advantage of all subsidies for which you may qualify.
“Navigators work with consumers choosing plans in the Marketplace,” Collins said.
Seventeen states have their own health insurance exchanges. If your state offers a health insurance exchange, you may also purchase ACA-compliant plans and receive subsidies through your state’s exchange.
Consider Different Types of Plans
A high deductible health plan (HDHP) may be a more affordable option for those anticipating lower health costs in 2023. A deductible is the amount you must spend in a year before your insurance policy pays for some or all of your claims.
“If you’re relatively healthy and don’t expect many doctor visits in a year, you can increase your deductible in exchange for a lower premium,” Sangameshwar said. “However, choosing a high-deductible plan can be risky. If something catastrophic happens, you could incur huge out-of-pocket costs. If you opt for a high-deductible health plan, get one with a health savings account (HSA) or flexible spending account (FSA) to help with unexpected medical expenses.”
Collins also recommends considering not just they monthly premium you’ll be paying, but also potential out-of-pocket expenses that may come up.
“A cheaper plan may have higher deductibles or co-pays, and those can add up, so it’s important to look at what the plan offers,” she said. “Make sure that you are in the plan that matches the expenses you expect.”
Shop Around With Caution
Some off-Marketplace plans may provide competitive rates, but subsidies do not apply to off-Marketplace plans.
Collins said if you search for plans that are not on the Healthcare.gov Marketplace, be sure your plan is ACA-compliant so that you are still receiving the required coverage.
“Some plans sold off the ACA marketplace might not give you the coverage you need,” she said. “You won’t be assured of getting the subsidies you qualify for, and many plans are marketed as good plans when they’re not.”
What This Means For You
Health insurance costs on the ACA Marketplace will be more expensive in 2023 at face value, but that doesn’t mean they have to be for you. If you’re still exploring options, keep in mind that open enrollment for health insurance through Marketplace ends January 15, 2023.