Americans enjoy an arguably world-class healthcare system — but that system isn’t cheap. Call up any league table, and you can see the U.S. spends more than double what Canadians are spending on healthcare.
Unfortunately, it looks like things are about to get a lot more expensive.
Medical inflation, rising drug costs, and macroeconomic policies are hitting medical providers hard in 2025. Employer-based plans are really feeling the heat, and insurers are saying they can no longer afford to absorb all these costs.
Translation: Health insurance premiums are about to increase in 2026, and some of those increases are going to be huge.
Read on to find out why health insurance premiums are going up in 2026, what’s been happening to the Affordable Care Act (ACA), and exactly how much you can expect your premiums to rise next year.
Why Are Health Insurance Premiums Going Up in 2026?
The health insurance market is essentially facing a perfect storm right now. Healthcare and prescription costs are going up, inflation and tariffs are eroding bottom lines, and expiring tax credits are squeezing insurers like never before.
That’s put insurance providers between a rock and a hard place, and they are passing these price hikes on to consumers in the form of higher premiums.
But as always, there’s a little bit more to it than that.
Let’s take a closer look at what’s causing the problem:
Healthcare Costs Are Rising
The biggest contributing factor in premium hikes has been the overall cost of healthcare in America.
Insurers claim the cost of medical care and utilization is rising sharply. These shifting expenses are often referred to as “medical trend.” Over the last year, medical trend shot up by around 8%. PwC is forecasting these costs to rise by a further 8.5% in the year ahead.
Why the steady rise?
A lot of it has to do with higher prescription prices, inflation, and macroeconomic policies that are pushing up the cost of medical instruments, staffing, and treatments.
A lot of healthcare providers are also facing labor shortages and higher staffing costs due to inflation. This has led to higher reimbursement negotiations, which end up feeding directly into insurance premiums.
Popular Drugs Are Getting More Expensive
Another reason insurers are hiking premiums is to insulate themselves against increasingly expensive prescription drugs.
Weight-loss and diabetes drugs like Ozempic, Mounjaro, and Wegovy have grown wildly popular in recent years. Right now, a month’s supply of Ozempic is coming in at $997.58.
Meanwhile, the cost of gene therapies like Zolgensma and Casgevy has risen above the $2 million mark per dose. To be fair, these drugs are designed to treat very specific conditions. But it should give you an idea of the price tags that Big Pharma is passing on to flailing insurers.
Macroeconomics Has Hit Medical Providers
President Donald Trump’s administration’s sweeping tariffs have definitely hurt the medical industry.
Because leading healthcare providers rely on complicated supply chains and foreign manufacturers, import taxes have inflated the baseline cost of U.S. medical supplies.
Global consultancy Berkeley Research Group found that increased tariffs have pushed up the prices of disposable medical devices, diagnostic equipment, personal protective equipment (PPE), and surgical devices.
Tax Credits Are Expiring
Tax credits are also a major player here.
The enhanced premium tax credits that were expanded by the American Rescue Plan Act in 2021 are finally expiring at the end of 2025. These credits lowered premiums by around $705 per patient per year, and insurers are expecting premiums to increase by around 4% when they finally disappear.
That being said, analysts say out-of-pocket expenses could increase by up to 75% for subsidized enrollees.
Enrollment numbers are likely going to be hit, too.
Enhanced premium tax credits expanded ACA eligibility to American households earning above 400% of the poverty line. When these credits go, eligibility will decrease. Healthier individuals will inevitably then opt out to cut household costs, leaving insurers facing a group dominated by older and sicker patients.
Those shifting demographics inevitably contribute to the cost of care, which then goes on to push up premiums even further.
What Is Happening to the ACA in 2025?
The ACA marketplace is experiencing a surge in growth right now. A record 24.2 million Americans have enrolled, making this the marketplace’s busiest year to date.
But the ACA has also been hit with some major policy changes in 2025. These changes are part of the reason that household premiums are expected to continue rising over the next 12 months.
So, what gives?
We’ve already talked about the expiration of enhanced premium tax credits. When they disappear at the end of this year, insurers have warned that both premiums and out-of-pocket expenses will increase. But the ACA has also been affected by strict new marketplace rules and Trump’s “One Big Beautiful Bill” in recent months.
Here’s what you need to know:
Marketplace Integrity and Affordability Rule
On Aug. 25, the Centers for Medicare & Medicaid Services (CMS) introduced its new Marketplace Integrity and Affordability Rule.
The rule is designed to curb fraudulent enrollments. Changes include:
- Automatic re-enrollment in zero-premium plans have been stopped
- The low-income Special Enrollment Period (SEP) has been removed
- DACA recipients are no longer eligible
Tighter income and eligibility verification and strict broker compliance rules have also been introduced.
The CMS reckons this rule will reduce ACA enrollment by up to 1.8 million people, subsequently lowering premiums. But any potential reduction here will likely be outpaced by the effects of further opt-outs and medical inflation.
It’s also worth pointing out there are a few legal challenges to this rule underway. So, we’ll have to wait and see if and when full implementation is allowed to go ahead.
The “One Big Beautiful Bill”
The so-called “Big Beautiful Bill” that Trump signed into law in July included over $1 trillion in healthcare cuts. The ACA was one of the biggest victims of those cuts.
The bill effectively reduced federal funding for the cost-sharing subsidies that enable millions of Americans to afford ACA plans. Meanwhile, new work requirements for Medicaid recipients and caps on how states finance their Medicaid programs were also introduced. Because the ACA’s coverage scheme is essentially built on Medicaid, this decrease in Medicaid coverage will also diminish ACA eligibility.
The bill has also introduced over $1 trillion worth of cuts to federal health spending over the next 10 years. These cuts include ACA grants, stabilization funds, and support for outreach and enrollment assistance.
As a result of these changes, analysts are expecting America’s uninsured population to increase by around 15 million over the coming decade.
Some states are trying to backfill subsidies and absorb some of these costs with their own state-funded programs. California and Massachusetts are leading the charge in cost reduction. But not all states have the budget, and so the Big Beautiful Bill seems poised to make ACA coverage less affordable.
How Much Will Premiums Increase in 2026?
There’s no beating around the bush: Your health insurance premium is going to increase in 2026. It’s just a matter of how much.
According to the Peterson-KFF Health System Tracker, the average proposed marketplace premium increase is 20%. The median premium hike is slightly lower at 18%.
But the state you live in is also going to be a big factor in terms of cost.
For example, UnitedHealthcare has proposed an increase of 66.4% in New York. Meanwhile, HMO Colorado has said to expect average rises of 33.6% and individual consumers in Rhode Island are facing hikes of around 23.7%.
You should check with your existing insurer and your local marketplace to figure out exactly what sort of rise is headed your way.
But the bottom line is this: It doesn’t matter whether you rely on the ACA for coverage. Either way, you’d better brace for impact, because the entire country will be affected by these price hikes in 2026.
On the date of publication, Nash Riggins did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
