Tariffs drive some health plans to hike premiums
Health insurers are starting to notify states that tariffs will drive up the premiums they plan to charge individual and small group market enrollees next year.
Why it matters: The Trump administration's trade policy is adding another layer of uncertainty for health costs as Congress considers Medicaid cuts and is expected to sunset enhanced subsidies for Affordable Care Act coverage.
"There are sort of a perfect storm of factors that are driving prices up," said Sabrina Corlette, research professor at Georgetown's Center on Health Insurance Reforms.
The big picture: Health insurers calculate monthly premiums in advance of each year based on the expected price of goods and services and projected demand for them.
Tariffs announced by President Trump are expected to drive up the cost of prescription drugs, medical devices and other medical products and services. Some of that difference ultimately would be passed down to enrollees.
Where it stands: A handful of health insurers administering individual and small group plans have already explicitly told state regulators that tariffs are forcing plans to raise enrollee premiums more than they otherwise would next year, KFF policy analyst Matt McGough wrote in an analysis published Monday.
Independent Health Benefits Corporation told New York regulators in a filing last month that it plans to raise premiums for its individual market enrollees 38.4% next year.
About 3% of that is directly due to tariffs, based on projections of how much they'll increase drug prices and the use of imported drugs, Frank Sava, a spokesperson for Independent Health, told Axios.
Similarly, UnitedHealthcare of Oregon said in a filing that nearly 3% of its planned 19.8% premium increase for small group enrollees next year is due to uncertainty around tariffs, particularly on how they'll affect pharmaceutical prices.
Insurers "don't have any historical precedent or data to project what this is going to mean for their business and health costs," McGough said to Axios. "I think it really makes sense that they're trying to hedge their bets."
Trump hasn't implemented sector-specific tariffs on pharmaceuticals yet but told reporters Monday that they'd come "very soon."
Insurers typically sign multiyear reimbursement contracts with hospitals, but hospitals could ask to renegotiate if their costs skyrocket because of tariffs, Corlette said.
Insurers can't change their premiums throughout the year. But if health plans do overshoot their premium estimates in rate filings, they have to pay enrollees back the difference in rebates.
While there may be a competitive advantage to keeping premiums lower, there isn't really a way for insurers to make up for extra unplanned costs after the fact.
Yes, but: Some insurers indicated that while they're keeping a close eye on tariff-related impacts, they aren't baking them into their premium rates yet.
"There is uncertainty around inflation and the economy due to possible tariffs however we did [not] put anything for this in this filing," Kaiser Foundation Health Plan of the Northwest's report to Oregon reads.
State regulators can also push back on insurers' premium calculations before they're finalized, McGough noted.
What we're watching: While some states have earlier deadlines, insurers have to submit their 2026 ACA marketplace plan rates to the federal regulators by July 16, and proposed rates will be posted by August 1.
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