Image Source: Peterson-KFF Health System Tracker
In a significant development for health insurance consumers, individual market insurers are requesting the largest premium increases in more than five years for the year 2026. As health insurers submit rate filings to state regulators, the anticipated hike in premiums is set against a backdrop of rising healthcare costs and looming policy changes.
The health insurance landscape is on the brink of transformation, primarily due to the expiration of enhanced premium tax credits at the end of 2025. These credits have made health coverage more affordable, but their expiration is expected to spike out-of-pocket premium payments by over 75% on average. This change could result in healthier enrollees dropping their coverage, thereby inflating the costs for the remaining risk pool as it becomes sicker.
Understanding the Factors Behind Premium Increases
As per recent analyses, insurers cite several contributing factors to the proposed premium increases:
- Expiration of Premium Tax Credits: The enhanced premium tax credits will cease to exist, prompting insurers to raise their rates by an additional 4%, according to previous findings from Peterson-KFF Health System Tracker.
- Tariff Impacts: The ongoing tariffs are likely to inflate the prices of drugs and medical supplies, with one in seven insurers indicating that this could increase premiums by about 3%.
- Uncertain Regulatory Environment: Newly enacted policies and uncertainties from the recent budget reconciliation legislation and CMS rulings further complicate the landscape. Insurers have submitted preliminary rates without knowing fully how these changes will impact their operations.
Projected Premium Increases for 2026: What to Expect
The data reveals that across over 100 ACA Marketplace insurers spanning 20 markets, there is an expectation of a median premium increase of 15% for 2026. Many insurers are proposing hikes in the 10-20% range, while 27% are asking for increases of 20% or more. In stark contrast to recent years, where premium growth has been relatively stable, the current climate suggests a shift towards steep increases.
Last year, a mere 3% of insurers raised their premiums by 20% or more, but this year’s filings indicate none are pursuing rate decreases, highlighting the growing financial pressures that insurers are facing.
With these movements in the marketplace, individuals will gain clarity about how their specific plans’ premiums will change just before the open enrollment period begins on November 1. The finalized rates are anticipated to be published late summer, allowing consumers to plan accordingly.
Impact on Consumers and the Healthcare System
As consumers brace for these changes, the impacts of soaring premiums cannot be understated. Health insurance affordability will likely take a hit, displacing many from the marketplace. Early analyses suggest that this could lead to a reduced pool of healthier enrollees, complicating matters further for insurers who depend on a balanced risk pool.
Currently, various factors unmentioned publicly may also affect market fluctuations which vary state by state. Insurers’ assumptions around these elements are critical as they finalize their premiums. The healthcare labor market pressures and the substantial costs associated with new expectancy drugs, namely GLP-1 medications, are additional areas of concern for insurers.
Looking Forward: Navigating Change in Health Insurance
The impending premium increases signal a notable shift in the U.S. healthcare system that consumers must navigate. The discussions surrounding affordability, policy changes, and outstanding healthcare costs need to remain at the forefront as the nation gears up for the 2026 insurance landscape. All eyes will be on legislative moves and the decisions insurers make in response to evolving conditions.
FAQs
Why are health insurance premiums increasing for 2026?
Premiums are rising due to the expiration of enhanced premium tax credits, rising healthcare costs, and tariff impacts on drugs and medical supplies.
What is the expected percentage increase in health insurance premiums?
The median premium increase for 2026 is projected to be 15%, with many insurers proposing increases in the 10-20% range and 27% asking for 20% or more.
How will the expiration of premium tax credits affect consumers?
The expiration will likely raise out-of-pocket costs for consumers by over 75% on average, potentially leading many to drop coverage.
What can consumers do to prepare for these changes?
Consumers should stay informed about the upcoming enrollment period and consider their options for coverage in light of these anticipated increases.
Will there be changes to the ACA Marketplace?
Yes, new regulations and policy changes are set to alter the functioning of the ACA Marketplace, which may further influence premium rates.