Healthcare Costs Soar: Americans Brace for 7% Surge in Health Insurance Premiums
CHARLOTTE, N.C. – December 3, 2024 – A new report from insurance research site ValuePenguin.com reveals a worrying trend for millions of Americans: private health insurance premiums are set to rise by a steep 7% in 2025. This marks the fourth consecutive year of premium increases, pushing the average annual cost of health insurance to a record $7,452.
The cost of medical care continues to surge across the country, and those expenses are being passed down to consumers through rising premiums.
This means 42 states will see their healthcare costs escalate in 2025.
While every type of private health plan will face premium hikes, some will feel the pinch more than others. Platinum tier plans, Catastrophic plans, EPO, HMO & PPO plans are expected to see the most significant increases, ranging from 8% to 13%.
"Private Health insurance premiums are rising 7% in 2025 due to ballooning healthcare costs – which get passed on to policyholders in the form of higher premiums," explains Divya Sangameshwar, health insurance expert at ValuePenguin.com.
Regional Discrepancies:
The financial burden will not be evenly distributed geographically. Vermont, Alaska, and New York are poised to have the most expensive health insurance, with premiums significantly surpassing the national average by 86%, 75%, and 67%, respectively.
In contrast, residents of New Hampshire, Maryland, and Virginia can expect relatively affordable coverage, with premiums falling 32% to 40% below the national average.
A handful of states, including Vermont, New York, Alaska, North Dakota, Michigan, Utah, Montana, and New Mexico, will see double-digit increases in insurance rates, with Vermont facing the largest hike at a staggering 27%. This will push the annual cost of health insurance in Vermont to a staggering $13,884 — the highest in the nation.
Despite these alarming figures, there is a glimmer of hope for some. Six states – Iowa, South Dakota, Alabama, Tennessee, and North Dakota – will see a slight dip in health insurance premiums, with Iowa, South Dakota, and Alabama experiencing the most significant reductions of up to 7%.
Subsidies Offer Relief but Uncertainty Looms:
The good news is that most Americans purchasing health insurance through HealthCare.gov or state marketplaces will qualify for subsidies, which can significantly reduce their monthly premiums.
“In 2021, the American Rescue Plan introduced a program of enhanced health insurance subsidies which lowered premiums for every enrollee, and capped premiums at 8.6% of income,” Sangameshwar explains. "If congress does not extend the enhanced health insurance subsidies program, which is set to expire in 2025, millions of Americans can expect a steep increase in how much they’ll pay for health insurance in 2026 and beyond.”
With over 90% of enrollees qualifying for subsidies, the average monthly cost is lowered by more than $800.
Furthermore, 80% of enrollees will pay less than $10 per month for coverage with subsidies. The vast majority of insurance shoppers will also have the flexibility to compare plans from three or more health insurers, increasing their chances of finding a plan that fits their needs and budget.
Vicky Sangameshwar
Health Insurance Expert, ValuePenguin.com
