PA health insurance commissioner on rising rates, end of federal tax credits

A record half million Pennsylvanians used the state’s health insurance marketplace — Pennie — to get their health insurance for this year. Many of them got tax credits — cutting the cost for them significantly. But those federal tax credits expire at the end of this year, and insurance companies want to raise their premiums an average of 19% in the individual market and 13% in the small group market for small businesses. WPSU’s Anne Danahy spoke with Pennsylvania’s Insurance Commissioner Michael Humphreys about what he called the “perfect storm of challenges” hitting the health insurance market and what it means for consumers.

Here’s their conversation.

Anne Danahy
Michael Humphreys, thank you so much for joining us.

Michael Humphreys
Thanks, Anne, glad to be here.

Anne Danahy
Your office, the Pennsylvania Insurance Department, reviews the rate increases insurance companies want to charge for the upcoming year. The state is saying those increases could be significant for this coming year. First, who does this apply to? Who’s buying their insurance this way?

Michael Humphreys
So, Anne, we recently announced what proposed rates look like for 2026, and that’s both in the individual market, so like the Pennie marketplace for individuals that don’t get coverage through work may purchase coverage through Pennie to cover themselves or their family. And that was right at around 19%, which is actually tied there with the national average. All states are seeing pretty significant rate increases proposed for next year. But also in that press release, we talked about the small group market. So that’s employers that are generally less than 50 individuals that still purchase coverage through a commercial insurance plan versus something like setting up their own insurance company. And that’s more significant than in recent years. It’s at 13% on average, but obviously not as high as the individual market is looking.

Anne Danahy
What’s behind those increases?

Michael Humphreys
It’s almost a perfect storm of challenges. So the end of enhanced premium tax credits, which are currently set to expire on December 31st of 2025, if Congress does actually let them expire, that means a significant impact, even more than the 19% impact. We anticipate rate increases of 82% or more for a lot of the enrollees on Pennie, just because that subsidy helped them pay for their insurance coverage.

The first piece I would say is that the EPTC (enhanced premium tax credits) is going away. What we anticipate that meaning is that the young, healthier individuals are no longer going to find coverage affordable. And they’re going to say, you know, I have school books, I have groceries that need to take priority, housing, and they’re going to forego insurance. So the second piece of that challenge is the morbidity of the overall market. So when you see healthy individuals leaving the market, it means the overall market is less healthy. So insurers are raising their prices in anticipation of a less healthy market for next year.

The other two pieces are outside of the federal activity. It’s just the rising cost of healthcare. The anticipation is that healthcare costs continue to increase faster than inflation. And then finally, in addition to those services that are covered costing more, we’re seeing more healthcare services being used in general. So outpatient, inpatient, prescription medications, all of those are increasing in frequency and severity. So when you take that all together, that’s what makes up the bulk of the 19% rate increases that we’re being asked for.

Anne Danahy
So a storm of all these factors coming together at once, I want to just go back to the cost increases that people could see and you’re saying it might drive some people out of the market. Just taking a look at some of the numbers you have on the website, it has an average annual loss of tax credits for someone in Center County that could be $2,400, $2,700 in Elk County, $2,000 in Clinton. So it varies by county, but it’s a big hit. So you’re thinking that people are just going to say, “you know what, I can’t have health insurance”?

Michael Humphreys
Yeah, there’s so many examples if you go on the Pennie website. This is really going to hit individuals over the age of 50, those that are pre-Medicare, so they don’t have an option to go into Medicare. So a 60-year-old couple in York, for example, $82,000 in annual income. They’ll see their premium go from $7,000 a year to $35,000 in a year.

So it’s individuals like them and others that when you’re talking about almost 30-plus-percent of your income going to health insurance, they’re going to forego insurance in some cases.

And that’s why we, the Shapiro administration, myself, the Pennie executive director, have really been pushing for Congress to extend these tax credits for individuals into next year. People will soon be finding out when they go on Pennie to look at what their options look like, just how much the increases look, and it’s going to be significant.

Anne Danahy
And you outlined the various factors that are going into it, but is there anything that the state can do to help people be able to afford insurance when the rates are going to go up that much?

Michael Humphreys
Yeah, we’re doing two things, Anne. And the first is Governor Shapiro has been steadfast in saying that we’re going to look at every dollar that they’re projected to increase. So the way this works is the company files proposed rates for next year in the late spring. So they came in in May, and now our team of department actuaries goes through all of their claims activity, all of their projections for next year to really make sure what they’re asking for is a realistic assumption of what claims could look like for next year, because we don’t want them to charge any more than they absolutely need to deliver on the promise.

The second piece is we’ve actually started to go out in communities to talk about what health insurance rates could mean for individuals. So we’re going around many libraries across Pennsylvania and just giving individuals an opportunity to talk to us about, A, what it means for them, but then also to talk to them about how to shop for coverage. Because this year, I think more than ever in the last 15 years, it’s going to be so important for individuals that purchase in the individual market to go on Pennie, to look at what those options look like.

Talk to an insurance agent if you feel like it’s overwhelming or an exchange
assister to help walk through the various options that may be available to you, because sometimes there’s going to be plans that are more affordable.

I think what’s really fortunate for Pennsylvania is we have a very competitive market compared to many states. So it may be that you’re in a county where a new company has come in over the last two years or so that you hadn’t looked at in the past because when you initially signed up, they weren’t there, and then you’ve auto-enrolled in coverage ever since. So really just taking a look at what options are available to you and figuring out what a price point is that you’re comfortable with is, I think, going to be most important as we head into open enrollment this year.

Anne Danahy
Michael Humphreys, thank you so much for talking with us.

Michael Humphreys
Thanks, Anne, appreciate your time.

A decision on approvals of the proposed rate increases is expected in late September or early October.

The Pennsylvania Insurance Department is holding information sessions on the proposed Pennie rates. Upcoming meetings include:

• 2-3 p.m. Sept. 11, DuBois Public Library, 31 South Brady Street, DuBois, PA 15801
• 12:15-1:15 p.m. Sept. 12, Schlow Centre Region Library, 211 South Allen Street, State College, PA 16801