Rising Premiums and Diminishing Tax Impact Drive 85,000 Off Pennsylvania’s Health Exchange
HARRISBURG, Pa. — A significant shift in enrollment numbers has hit Pennie, Pennsylvania’s state-based health insurance marketplace, where approximately 85,000 customers have dropped their health plans. The exodus is being attributed to a combination of spiking insurance premiums and a reduction in the effectiveness of available tax credits for certain income brackets, leaving thousands of residents unable to justify the monthly expense.
The decline highlights a growing affordability gap for middle-income Pennsylvanians who do not qualify for the deepest tier of government subsidies. While the Affordable Care Act (ACA) provides tax credits to lower premiums, these subsidies are tied to the cost of a “benchmark” plan. When consumers choose plans that increase in price faster than the benchmark, or when their household income rises slightly, the net cost to the consumer can jump drastically. For the 85,000 individuals who left the marketplace, the “sticker shock” of higher deductibles and monthly payments proved unsustainable against the backdrop of broader economic inflation.
Background
Pennie was established as Pennsylvania’s official health coverage exchange, transitioning the state away from the federal HealthCare.gov platform to allow for greater local control and cost management. Since its inception, the exchange has been the primary vehicle for residents who do not receive insurance through an employer, Medicare, or Medicaid to secure coverage.
The insurance market has faced turbulent conditions over the last fiscal year. Insurers have raised rates to account for higher utilization of medical services and the rising cost of prescription drugs. Although federal subsidies under the Inflation Reduction Act were designed to cap premiums at a percentage of income, the complex interplay between plan pricing and subsidy calculations means that “affordable” on paper does not always translate to affordable in the household budget.
Objections and Counterpoints
Despite the alarming drop in these specific accounts, state officials and marketplace advocates urge caution in interpreting the data as a total failure of the system. Representatives for Pennie have noted that despite the 85,000 departures, overall enrollment figures remain near historic highs due to an influx of new sign-ups during the open enrollment period.
Furthermore, analysts point out that a portion of the drop-off may not result in uninsured residents. In the fluctuating post-pandemic labor market, it is plausible that a percentage of these former customers secured employment that offers company-sponsored health benefits, rendering their Pennie plans unnecessary. Additionally, some churn is expected annually as eligibility for Medicaid shifts. Officials emphasize that for the vast majority of current enrollees—nearly 90%—subsidies continue to cover the bulk of premium costs, keeping insurance accessible for the state’s most vulnerable populations.
