State regulators approve sharp health insurance rate increases

Health insurance regulators in Delaware and New Mexico have approved steep rate increases for 2025 individual market plans, reflecting the combined effects of federal policy shifts and rising medical costs. 

Rates will climb between 25% and 35%, adding pressure on consumers and insurers alike.  

In Delaware, the Department of Insurance approved rates for 40 marketplace plans. Highmark plans will rise 25%, while AmeriHealth Caritas plans will increase 34.89%, according to a Best Wire report. Regulators cited federal budget activity, changes to marketplace rules, and the expiration of enhanced premium tax credits at year-end as the main drivers.

However, rate increases extend beyond the individual market. Highmark requested a 22.73% rise for off-market small group plans, while UnitedHealthcare sought a 30.33% hike. Insurance Commissioner Trinidad Navarro (pictured above, left) noted marketplace enrollment has doubles since 2020, supporting competition and improved benefits, but warned that "significant federal turmoil" will likely reduce enrollment in 2026. 

In New Mexico, plans sold on and off the BeWell marketplace will increase an average of 35.7%, the report said. Regulators pointed to higher-than-expected claims in 2024, increased medical and pharmaceutical costs, and greater utilization. To soften the blow, the state will use its Health Care Affordability Fund to provide up to $68 million in premium assistance by 2026. The program covers households earning up to 400% of the federal poverty level, or $128,600 for a family of four. 

Superintendent of Insurance Alice Kane (pictured above, right) said the state’s advance planning will shield most consumers from the loss of federal premium support. She added that the rate pressures mirror national trends as insurers grapple with rising costs across all markets.

The strain is also evident in Medicare Advantage. The New Hampshire Insurance Department reported two insurers will exit the market, while UnitedHealth Group disclosed its medical costs exceeded projections by $6.5 billion in the second quarter. The company’s Medicare Advantage cost trend reached 7.5% versus an expected 5%. CEO Stephen Hemsley described the environment as a “generational pullback” in Medicare funding, warning that cost pressures will continue through 2026, the report said.

AM Best currently assigns Financial Strength Ratings of A (Excellent) to operating entities of Highmark Inc. and A+ (Superior) and A (Excellent) to UnitedHealth Group subsidiaries.

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