PHOENIX — Arizonans who buy health insurance on the state’s Affordable Care Act marketplace should brace for major sticker shock during open enrollment this year.
The state agency that oversees insurers is warning of rate increases as high as 55.3%. But consumers will also end up paying a lot more for their plans, because federal tax credits that offset the price of premiums are ending.
“They certainly are going to experience a price shock for how much more they're going to have to pay for their health insurance premiums on a monthly basis,” said Matt McGough, a policy analyst at KFF, a nonprofit health policy research, polling and news organization.
The Arizona Department of Insurance and Financial Institutions says insurers have submitted proposed hikes ranging from about 2.5% to 55.3% for plans on the state’s marketplace.
Premiums are calculated by adjusting the insurance rate based on your personal information, such as age.
McGough said most people will see an even bigger increase in their monthly premium payments because premiums won’t be reduced anymore by tax credits. In Arizona, that could be close to 90%, he said.
“Most enrollees will be facing a double whammy of higher insurance bills and losing a subsidy that lowers much of that monthly cost for them,” he said.
McGough, one of the authors of a national KFF analysis on why ACA premiums are going up, said a combination of factors are leading to the steep rate hikes.
The expiration of the federal tax credits is one of them. That's because insurers are estimating that more people will drop their coverage because it’s getting more expensive.
“Those are relatively younger, healthier consumers that will decide to leave the marketplace, and that leaves a sicker, relatively higher cost pool of enrollees that insurers will have to cover,” McGough said.
Health care costs are also rising, some of it driven by tariffs.
“A lot of insurers are pointing towards tariffs as a potential increase in premiums for the next year, specifically its impact on pharmaceuticals and medical devices,” he said.
And federal ACA policy changes mean consumers could pay more of their insurance’s overall cost.
Small-business owners and gig workers who buy ACA plans may need to consider working instead for an employer that offers affordable coverage, McGough said.
“Unfortunately, the reality is that some people will be left with no good option,” he said.
DIFI, the Arizona insurance regulator, is recommending consumers shop around this year for the best plan.
Open enrollment begins on November 1.
