Marketplace health premiums for individuals and small group employers will rise by 8 percent and 9 percent, respectively, next January, but the hikes will be less steep than this year's double-digit increases and less steep than insurers initially proposed.
Maine Insurance Commissioner Bob Carey recently approved health insurance rates that will take effect on January 1, 2025. According to a press release, the Department worked with health insurers, including Anthem, Harvard Pilgrim and Taro Health, to reduce the originally proposed rates. The approved rate increases were reduced from a 14.2% average increase proposed across various insurers to an 8.6% average increase for individuals, and from a 14.5% average proposed increase for small employers with fewer than 50 employees to an approved average 9.4% increase.
“That's a big number. Yes, of course, it's better than the closer to 15 percent that was in 2024, but I don't think anybody's happy about it,” Carey said of the 2025 increase.
For next year, the department has asked insurers to take into account regional economic disparities in Maine that affect premium rates in southern and northern Maine: Insurers were charging northern Maine almost 25% more than southern Maine, even though the southern part of the state is much wealthier.
As a result of the department's intervention, individuals and small groups in Aroostook, Hancock and Washington counties will see very modest or no premium increases in 2025 compared to the rest of the state.
“For many years, for competitive reasons, carriers have essentially charged higher rates in the three northern Maine counties than they do in the southern counties,” Carey said, “so we're closing the gap between the rates charged to those three counties and the rest of the state.”
Carey said the increases won't affect everyone equally, depending on a person's income level and insurance plan. Someone who qualifies for subsidies based on their income may not be affected by the increases at all.
Why insurance premiums are rising
According to a press release from the Insurance Department, three factors will determine how much premiums will increase.
The first is the price of services, meaning how much hospital fees, provider fees, and prescription drug costs. The second is service utilization, meaning, for example, how often people use the emergency department or have more outpatient surgeries. And the last is the mix of services, meaning what care people get and how they get it.
This year, the main drivers of rate increases are prescription drug and hospital and provider costs, which are rising due to both price and utilization.
“We need to make drug companies pay a bigger share of the cost than consumers or insurance companies,” said Courtney Cowan, an independent insurance consultant in Maine. “If that could be achieved legislatively, it would probably change the way insurance is structured.”
Maine's reinsurance program uses state and federal funds to lower premiums, which allows the department to negotiate lower rate increases, Carey said. Essentially, federal and state funds ($70 million a year) cover some claims costs, and insurers can seek reimbursement from those funds to lower premium increases.
Without reinsurance, rate increases in 2025 would nearly double, Carey said.
