Obamacare Benchmark Premiums Up 75% Nationally from 2014-2024

 This week’s Paragon Pic demonstrates the growth in Affordable Care Act (ACA) benchmark premiums for single coverage from 2014 to 2024 by state and the variation across the country. Overall, benchmark premiums increased 75 percent between 2014 and 2024—more than 60 percent higher than the premium growth in employer plans during this time. The figure makes clear that premium growth has been very uneven across the country (a high of 201 percent in West Virginia to a low of 16 percent in New Hampshire) and that 2024 state benchmark premiums varied significantly.

The benchmark plan is the second-lowest-cost silver exchange plan and largely determines federal subsidies. The subsidies are structured so that the benchmark premium cannot exceed a certain amount of household income with higher subsidies for lower-income enrollees. Since benchmark premiums vary so dramatically across the country, so do subsidies. The contrast between neighboring states New Hampshire and Vermont makes this clear. Federal taxpayers are bearing a much greater cost for exchange enrollees in Vermont—largely because Vermont does not permit insurers to charge younger enrollees lower premiums than older enrollees, which significantly raises overall premiums.

There are numerous problems with the subsidies particularly after they were significantly increased by Congress through 2025, including that they lead to massive amounts of inefficient and fraudulent spending (as previous Paragon research has documented). One problem is a huge disparity that provides greater subsidy benefit in states that have higher premiums. In Follow the Money, Theo Merkel and I discussed this problem, recommending that Congress cap the benchmark premium at 125 percent of the national average for purposes of the subsidy calculation. From our paper:

“[T]he design of the actual credit is also inherently inflationary, as it is tied to premiums of a benchmark plan and caps an eligible enrollee’s premium contribution as a percentage of income. This means that, as premiums of that benchmark plan go up, taxpayers foot the bill. In areas where there is little or no insurer competition, this is especially problematic, as it effectively puts control of the subsidy amount to the insurer—the ultimate recipient of the subsidy.”

These downsides should be mitigated by instituting a cap on the benchmark plan used to calculate the PTC amount. The cap should be a percentage of the national average with some flexibility for geographic variation in cost of care. A benchmark cap at 125 percent of the national average should provide more restraint and would be a marked improvement over the status quo.

https://paragoninstitute.org/paragon-pic/obamacare-benchmark-premiums-up-75-nationally-from-2014-2024/