(Pocket Watch) — Across the United States, consumers are navigating a complex and shifting landscape of healthcare costs. This year, healthcare premiums are once again a central topic of financial planning, with significant variations emerging not just between different types of insurance but, most notably, between different geographic regions. A confluence of economic pressures, policy adjustments, and evolving healthcare utilization patterns is driving a nationwide trend of rising premiums, yet the magnitude of these changes is far from uniform.
Initial analyses from federal agencies and private sector experts indicate that while the national average for health insurance premiums is on an upward trajectory, a person’s home state—and even their specific county—plays a critical role in determining the final cost they face. Key factors fueling these regional disparities include local market competition among insurers, state-level regulatory policies, the consolidation of hospital systems, and the lingering economic effects of post-pandemic inflation on medical services and labor.
For millions of Americans, particularly those on or nearing retirement, understanding these regional shifts is essential for making informed decisions during open enrollment periods for Affordable Care Act (ACA) Marketplace, employer-sponsored, and Medicare plans. This report provides a comprehensive overview of the current trends in healthcare premiums, breaking down the key developments and their implications on a region-by-region basis.
National Trends: A Broad Perspective on Rising Costs
Before delving into regional specifics, it is crucial to understand the national forces at play. Several overarching factors are exerting upward pressure on health insurance premiums across the country, creating a baseline of rising costs that is then modified by local conditions.
According to a recent analysis by the Kaiser Family Foundation (KFF), the average benchmark plan premium on the ACA Marketplace saw a notable increase this year. While federal subsidies insulate many from the full impact, the “sticker price” of these plans reflects the underlying cost pressures felt by insurers. These pressures are not limited to the individual market.
KFF’s 2023 Employer Health Benefits Survey reported that the average annual premium for employer-sponsored family coverage reached nearly $24,000, a 7% increase from the previous year. While employers typically cover the majority of this cost, the portion paid by workers has also risen, impacting household budgets nationwide.
The Primary Drivers of National Premium Hikes
Experts point to a handful of primary catalysts for this year’s cost increases:
- Persistent Inflation: General economic inflation over the past two years has increased the cost of everything required to deliver healthcare, from medical supplies and equipment to energy and administrative services. Hospitals and clinics are also facing higher labor costs as they struggle to attract and retain staff in a competitive market. These higher operational costs are inevitably passed on to insurers, who then adjust premiums accordingly.
- Post-Pandemic Utilization Rebound: During the height of the COVID-19 pandemic, many individuals deferred non-emergency medical care. In the time since, there has been a significant rebound in utilization as people catch up on delayed screenings, surgeries, and treatments. This surge in claims for medical services has been more pronounced than many insurers initially projected, leading them to raise rates to cover the higher-than-expected payouts.
- High-Cost Prescription Drugs: The introduction and rapidly growing popularity of new, expensive pharmaceuticals, particularly GLP-1 agonists like Ozempic and Wegovy for diabetes and weight management, have added billions to national healthcare spending. A report from the American Society of Health-System Pharmacists (ASHP) highlights that spending on these drugs has become a significant factor in insurers’ cost calculations.
- Policy Shifts and Market Dynamics: A major policy change influencing the insurance market is the “unwinding” of the Medicaid continuous enrollment provision, which ended last year. States are now redetermining eligibility for millions of people who were continuously covered by Medicaid during the pandemic. Projections from the Department of Health and Human Services (HHS) estimated that millions would lose Medicaid coverage and need to transition to other sources, such as ACA or employer plans, altering the risk pools and administrative costs for insurers.
A Closer Look: Regional Premium Dynamics
While national trends set the stage, the most significant story this year lies in the regional variations. The healthcare system in the United States is not a single entity but a patchwork of local markets, each with its own unique characteristics. These differences lead to starkly different outcomes for consumers depending on where they live.
The Northeast: A Mix of Stability and Spikes
The Northeast region, home to some of the oldest and most robust state regulatory systems, presents a mixed bag of premium changes. States with strong rate review authority have, in some cases, been able to moderate the increases proposed by insurance companies.
In New York, for instance, the Department of Financial Services (DFS) announced that it had significantly reduced the rate increases requested by insurers for individual and small-group plans. While premiums still rose, the final approved rates were, on average, more than 50% lower than what insurers had originally sought. A DFS spokesperson stated, “Our review process ensures that premiums are justified and not excessive, protecting consumers while maintaining a stable market.”
Similarly, Massachusetts, with its long-standing health reform model and competitive insurance market, has also seen relatively moderate premium adjustments. The Massachusetts Health Connector, the state’s ACA marketplace, reported single-digit average increases for its benchmark plans.
However, other states in the region have experienced more substantial hikes. In Connecticut, regulators approved average individual market rate increases in the double digits for some carriers, citing rising medical and pharmacy costs as the primary justification. Experts at the Georgetown University Health Policy Institute note that even in states with strong oversight, regulators must balance consumer affordability with the financial solvency of insurers. If rates are set too low, insurers may choose to exit the market, reducing competition and consumer choice in the long run.
The South: Facing Higher-Than-Average Increases
Many parts of the South are experiencing some of the steepest premium increases in the nation. This trend is often attributed to a combination of factors, including a higher prevalence of chronic diseases, less competition among insurers in rural areas, and policy decisions at the state level.
In Florida, which has one of the largest ACA marketplaces in the country, premium increases have been significant in several populous rating areas. An analysis by health policy consulting firm Avalere Health found that benchmark plan premiums in the Miami-Dade area saw a larger-than-average increase. This is partly due to the high demand for medical services in a large, aging population and the negotiating power of large hospital systems in the region.
Texas, another major market, has also seen considerable variation. Urban centers like Dallas and Houston, which have more insurance carriers competing for business, have experienced more moderate rate changes. In contrast, many rural counties in Texas have only one or two insurer options, giving those carriers more leverage to set higher prices. The lack of Medicaid expansion in several Southern states, including Texas and Florida, also means that a larger share of low-income individuals seeks coverage on the ACA Marketplace, which can affect the overall risk pool and subsequent premium calculations.
The Medicaid unwinding process has had a particularly strong impact in the South. “States in this region have seen some of the highest numbers of disenrollments,” a senior policy analyst at KFF explained in a recent webinar. “When these individuals, many of whom have ongoing health needs, move into the individual market, it creates a period of adjustment for insurers as they assess the new risk profile of their enrollees.”
The Midwest: A Tale of Two Markets
The Midwest often exemplifies the urban-rural divide in healthcare costs. The region is characterized by highly competitive markets in major metropolitan areas, which helps to suppress premium growth, alongside vast rural stretches where limited provider networks and few insurers can lead to higher costs.
In Illinois, for example, consumers in the Chicago metropolitan area have access to plans from multiple carriers, fostering price competition. The Illinois Department of Insurance reported that average rate changes in these competitive areas were modest. However, in the state’s southern and central rural counties, where provider and insurer options are scarce, proposed increases were substantially higher.
Ohio and Michigan have seen similar dynamics. The role of large, integrated hospital systems is particularly pronounced in the Midwest. These systems, which have been growing through mergers and acquisitions, wield immense bargaining power in negotiations with insurers. “When a single hospital system dominates a region, it can command higher reimbursement rates for its services,” stated a report from The Commonwealth Fund. “Those higher costs are directly reflected in the premiums paid by individuals and employers.”
Some Midwestern states have implemented reinsurance programs to help stabilize their individual markets. These programs use state and federal funds to help insurers cover their most high-cost claims. States like Wisconsin and Minnesota have used reinsurance to keep premium increases lower than they otherwise would have been, providing a cushion against sharp rate hikes.
The West: Innovation, Competition, and Cost Pressures
The Western U.S. features some of the most innovative and actively managed state insurance markets, but it is not immune to the cost pressures affecting the rest of the country.
California, through its state-run marketplace, Covered California, engages in active negotiation with insurers to control costs. Each year, the agency negotiates rates and plan designs, leveraging the purchasing power of its millions of enrollees. This year, Covered California announced a statewide average premium increase in the high single digits, citing medical utilization and pharmacy costs as the main drivers. However, the agency emphasized that the increase varied significantly by region, with some areas seeing much smaller adjustments. “Our model allows us to scrutinize and push back on unwarranted rate hikes, but we cannot completely defy the national trend of rising medical costs,” said Covered California’s executive director in a press statement.
Washington and Colorado have taken a different approach by introducing “public option” plans. These are state-designed health plans sold by private insurers on the marketplace, with the goal of increasing competition and affordability. In Washington, the “Cascade Care” plans have shown some success in providing a lower-cost alternative in certain counties. Colorado’s “OmniSalud” plan aims to reduce premiums over time. The initial impact of these plans on the overall premium landscape is still being evaluated, but they represent a key state-level strategy for addressing affordability.
In contrast, states with vast, sparsely populated areas like Wyoming and Montana continue to face challenges related to a lack of competition. In many counties, only a single insurer operates on the ACA Marketplace, resulting in some of the highest premiums in the nation. The logistical challenges and high costs of providing healthcare in these frontier areas remain a persistent hurdle.
How Different Coverage Types Are Affected
The shifts in healthcare premiums are not confined to a single type of insurance. The trends play out differently across ACA Marketplace, employer-sponsored, and Medicare plans, though they are all influenced by the same underlying cost drivers.
Affordable Care Act (ACA) Marketplace Plans
For those enrolled in ACA plans, the impact of rising premiums is often mitigated by federal subsidies, officially known as Advance Premium Tax Credits (APTCs). The Inflation Reduction Act extended enhanced subsidies through 2025, ensuring that most marketplace enrollees pay no more than 8.5% of their household income for a benchmark plan.
Because subsidies are tied to the cost of the benchmark plan in a specific region, when benchmark premiums rise, the dollar value of the subsidy also rises for eligible consumers. This design shields many from the full price shock. However, individuals who earn too much to qualify for subsidies, or those who choose more expensive “gold” or “platinum” plans, bear the full brunt of the premium increases. Furthermore, a shift in the second-lowest-cost silver plan (the benchmark) can alter subsidy amounts for everyone in a rating area, making it crucial for consumers to actively shop and compare plans each year.
Employer-Sponsored Insurance
The majority of non-elderly Americans receive health insurance through an employer. As noted, the average cost of these plans is rising significantly. This affects employees in two primary ways: through higher premium contributions deducted from their paychecks and through increases in out-of-pocket costs like deductibles and copayments.
A survey by the business consulting firm Mercer found that employers are expecting to see health benefit costs continue to climb. Many are exploring strategies to manage these costs without shifting an unsustainable burden onto their employees. These strategies include offering more high-deductible health plans (HDHPs) paired with health savings accounts (HSAs), promoting telemedicine to reduce costs, and implementing more intensive wellness and chronic disease management programs. The regional variations in costs also affect employers, particularly large companies that operate in multiple states and must navigate different cost structures and provider networks across the country.
Medicare Advantage and Part D
For the more than 30 million Americans enrolled in Medicare Advantage (MA) plans, premium trends have been relatively stable at the national level. The Centers for Medicare & Medicaid Services (CMS) announced that the average monthly premium for MA plans would see only a slight change this year. Many beneficiaries remain enrolled in a zero-premium MA plan.
However, these national averages mask significant regional and plan-specific changes. In some competitive urban markets, new zero-premium plans may have entered, while in other regions, some existing plans may have introduced a premium or increased their cost-sharing. Furthermore, changes to government payment rates to MA plans and new regulations around marketing and benefits are reshaping the landscape.
For Medicare Part D prescription drug plans, premiums are closely tied to the explosive growth in drug costs. While the Inflation Reduction Act includes provisions to lower drug costs for Medicare beneficiaries—such as the $2,000 annual cap on out-of-pocket drug spending that begins in 2025—insurers are still adjusting premiums in the near term to account for high-cost therapies. Beneficiaries are advised to use the Medicare Plan Finder tool each year to compare Part D and MA plans, as the most cost-effective option in their specific region can change dramatically from one year to the next.
Expert Analysis and What Lies Ahead
Health policy experts largely agree that the current trends are a product of both short-term economic factors and long-standing structural issues within the U.S. healthcare system. “The regional disparities we’re seeing are a direct reflection of a fragmented healthcare system where market power, state policy, and population health create wildly different cost environments,” remarked a senior fellow at The Brookings Institution. “Inflation lit the fire, but the kindling was already there.”
Looking ahead, several key factors will determine the trajectory of healthcare premiums:
- The Future of ACA Subsidies: The enhanced subsidies that have made ACA plans more affordable for millions are set to expire at the end of 2025. If Congress does not act to extend them, millions of people could face dramatic premium increases, potentially destabilizing the individual market. This remains the single most significant policy question on the horizon.
- Ongoing Cost Control Efforts: The full impact of the Inflation Reduction Act’s drug price negotiation provisions will take several years to materialize but represents a landmark effort to control a key driver of costs. Additionally, state-level experiments with public options, global budgets for hospitals, and enhanced rate review will continue to be important laboratories for policy innovation.
- Provider Consolidation: The trend of hospital and physician practice consolidation shows no signs of slowing. Federal and state regulators are paying closer attention to the anti-competitive effects of these mergers, but their impact on prices will continue to be a major factor in premium negotiations.
Navigating the Shifting Landscape
In summary, the narrative for healthcare premiums this year is one of widespread increases characterized by profound regional differences. National economic pressures and utilization trends have set a high baseline for costs, but the final price paid by consumers is ultimately shaped by local market dynamics and state-level policy choices.
For individuals and families, this reality underscores the importance of proactive engagement. The era of passively allowing a health plan to auto-renew without review may be financially risky. Experts universally advise consumers to use the annual open enrollment periods to their full advantage.
This involves carefully comparing all available plans, paying close attention not just to the monthly premium but also to deductibles, provider networks, and prescription drug coverage. Because the most affordable or suitable plan in a given region can change from one year to the next, a thorough annual review is the most effective tool consumers have to navigate this complex and ever-evolving financial landscape.
