Johns Hopkins Carey Business School professor finds ACA premiums climbed by nearly 60 percent in 11 years

A new study from Johns Hopkins Carey Business School led by Professor Ge Bai shows that private health insurance premiums increased by nearly 60 percent over 11 years for people with individual plans, including Affordable Care Act plans, while small- and large-group employer plans saw relatively minimal increases. The study does not apply to employer self-insured plans.

The research, to be published in the open-access American Medical Association journal JAMA Network Open on April 18, followed claims and premiums for each type of full-insurance plan between 2011 and 2021. Individual plans are plans purchased under the Affordable Care Act exchange or in off-market exchanges. During the decade, median premiums in those plans rose at a median of 59 percent, from $3,574 to $5,683 (inflation-adjusted to 2021 dollars).

 “The Affordable Care Act has made individual insurance plans less affordable for enrollees not eligible for federal subsidies,” said Bai. “Since taxpayers are subsidizing premiums for eligible enrollees, higher premiums mean greater burdens for taxpayers.”

Individuals who qualify for federal subsidies are those who are at 400 percent of the poverty level. Persons on the exchange or ACA saw the biggest jumps in their premiums in 2013-2014 and 2017-2018. The first, Bai says, was likely because several ACA requirements took effect, including mandatory essential health benefits and prohibited caps on yearly and lifetime benefits. The second was when the federal government terminated cost-sharing subsidy payments to insurers.

Median premiums rose for both small- and large-group plans between 2011 and 2021, but by 9.6 and 5.9 percent, respectively.

The research used insurers’ annual medical loss ratio filings for the period and compared the trends across plans, which covered between 70 and 80 million group members each year. It evaluated the premiums and claims state-by-state and found that rates at least tripled in Arkansas, Florida, and Massachusetts.  In Idaho, Iowa, Kentucky, Missouri, North Carolina, Vermont, and Wisconsin, median premiums were double or more.

“Taxpayers, the public, and policymakers should examine the impact of the Affordable Care Act on individual market premiums and explore policy options to stabilize and even reduce them. If the upward trend continues, individual plans will become increasingly unaffordable for unsubsidized enrollees, and taxpayer burden will grow as well.” said Bai.

Despite these increases, nationwide, the individual plan median premium is still more affordable than the small- or large-group plans. That’s also the case in 29 of 50 states and Washington, D.C. D.C.’s individual plan median represents the lowest premiums in the country, at $3,440, after an 8.7-percent decrease. Maine and Minnesota’s premiums also decreased over the 11 years.

Bai is a professor of Accounting at Johns Hopkins Carey Business School, teaching in Baltimore and Washington, DC. She is also a Health Policy & Management professor at the Bloomberg School of Public Health. Bai wrote the paper with Elizabeth Plummer of the Neeley School of Business and Burnett School of Medicine at Texas Christian University-Fort Worth and Allison Percy of the Health Analysis Division at the Congressional Budget Office.

The study is available at this link.

Interview Availability:
Ge Bai, PhD, CPA
Professor, Johns Hopkins Carey Business School
Professor, Johns Hopkins Bloomberg School of Public Health