Health insurance is an expensive topic for far too many Americans. As health care experts forecast another rise in premiums in 2024, in order to weather the storm, it’s important to know what is behind these changes and what will happen as a result.
In this article, we’ll dive into the trends shaping health insurance costs, focusing on market concentration, employer-sponsored plans, and individual plans offered through Healthcare.gov.
Find Out More about the 2024 Health Insurance Increase
1. Premiums are rising and the market is becoming more concentrated
The last decade has seen the U.S. private health insurance market become more concentrated. This means that there are fewer companies in the market and fewer companies against which to compete. In 43 states for large employer group plans and 47 states for small employer group plans, in 2022 three or fewer insurance companies had 80 percent or more of the enrollment market share.
What is wrong with market concentration?
Higher Premiums: This leads less competition to higher prices.
Fewer Choices: Less plan options for consumers may mean fewer choices on how to meet their needs.
Barriers for New Insurers: If market concentration becomes high, it will discourage new entrants, making the process of limited competition again.
This concentration in trend is due to the mergers and acquisitions and companies withdrawing out of markets. This is bad news for consumers and they lead to premium increases.
2. Comparison between Employer Sponsored vs. Individual Market Plans
The vast majority of Americans are covered by private health insurance, with employer sponsored plans and individual Marketplace plans being the biggest options there. Each cost structure and benefit unique to each type.
Employer-Sponsored Plans
Among them, cover about 165 million Americans.
Employers and employees share costs.
In 2022, a monthly per person premium under an employer sponsored plan was $54 less than in an individual Marketplace plan.
But employees shelled out an average of $41 more per month to help pay for their share of the premium.
Individual Marketplace Plans
Find a way to serve people who don’t have employer sponsored insurance.
Federal tax credits subsidize premiums for the enrolled eligible.
Base cost with tiered coverage (Bronze, Silver, Gold) with varying benefits and prices.
Marketplace plans are critical for those without employer options, but premiums on them are, broadly speaking, higher than other plans and reflect plan designs, beneficiaries covered, and tax treatment.
Factors That Are Driving the 2024 Health Insurance Increase
1. Insurance Providers Consolidation
In many states, premium hikes are due in part to the reduction of number of insurers operating in those states. This leads to less competition, more power by insurers to set higher rates without a fear of losing customers to other competitors.
2. Rising Healthcare Costs
The spending on medical services and prescription drugs directly impacts insurance premiums. The costs of private health coverage are projected to exceed $1.5 trillion in 2024, continuing to drive the cost of care out of reach for far too many people.
3. Shifts in Enrollment Trends
In 2022, as in previous years, the concentration of the individual insurance market decreased, and 35 states had concentrated markets. But it seems to have spared premium growth from slowing significantly, indicating other drivers of costs.
4. Economic Factors
All costs have been hitting higher levels due to inflation, labor shortages in healthcare, and demand for services post pandemic.
Getting Control of Rising Insurance Costs
1. Shop Around
Consumers should explore options on Healthcare.gov and compare plans to find the best balance between premiums and out-of-pocket costs.
2. Leverage Employer Benefits
Employed? Use employer contributions and look into Flexible Spending Accounts (FSAs), or Health Savings Accounts (HSAs) to reduce the out of pocket costs.
3. Stay Informed
Keep an eye on marketplace enrollment periods and when change in subsidy eligibility occurs. Many families see the help of federal assistance can significantly help lower the financial burden.
The Future of Health Insurance Costs
Market dynamics, healthcare spending and economic pressure combine to affect the trajectory for health insurance costs, which are all heading upward. Steps are needed to address these problems, and policymakers, insurers and consumers all need to work together. Here are efforts to expand access to affordable coverage, control healthcare costs and increase market competition all crucial to a sustainable system.
In understanding these trends, and learning how to prepare, individuals and families can be better armed to navigate the challenges of health insurance in 2024 and beyond.
