This month served as a stark reminder for millions of Americans regarding the significant expenses associated with health care coverage. Workers, Obamacare enrollees, and Medicare beneficiaries are facing significant increases in their health insurance premiums for 2026, adding to the ongoing affordability crisis in the nation. Employers are projected to experience a 9% increase in health benefit costs, marking the most significant rise in several years. However, they are likely to implement measures to mitigate the impact on employees, as indicated by consultants. The average premiums for the benchmark Affordable Care Act plan have increased by 26%, marking one of the most significant rises since the inception of the Obamacare plans over ten years ago. According to KFF enrollees’ actual premium payments are projected to increase by an average of 114% as a result of the expiration of the enhanced federal subsidies. Medicare Part B premiums, which encompass payments for doctors’ visits, outpatient hospital services, and various other forms of care, experienced a surge of nearly 10% this year. This marks the most significant increase in four years and represents the second-largest dollar increase in the program’s history. The standard monthly premium has reached $202.90, reflecting an increase of $17.90 compared to the previous year, as reported by the Centers for Medicare and Medicaid Services.
The increase occurs as insurers face heightened scrutiny in Washington, DC. President Donald Trump announced plans to convene with industry leaders to exert pressure for a reduction in premiums, as House lawmakers conducted extensive hearings on Thursday, interrogating the CEOs of several major insurers. Executives faced scrutiny from representatives across the political spectrum, who raised concerns about their inability to manage costs effectively. This is particularly notable given their expansion into substantial entities that encompass doctors’ practices, pharmaceutical benefit managers, pharmacies, and various other lucrative health care services. Furthermore, legislators consistently criticized the insurance executives for attempting to enhance their profits by denying or postponing the approval of the care that physicians assert is necessary for their patients. The insurers asserted their enhanced capability to coordinate treatment and emphasize value-driven care as multiservice providers, while highlighting their legal obligation to allocate a minimum of 80% of premium revenues towards health care claims. Furthermore, they indicated that they are revising their prior authorization practices to enhance the efficiency and simplicity of the approval process. Insurers, however, do not consistently experience pressure to lower costs, stated Vivian Ho. For example, numerous larger employers engage an insurance company to manage their health benefits while retaining responsibility for paying their employees’ claims. “There’s not as much incentive to drive the hardest bargain if you’re not responsible for most of the increased prices yourself,” Ho stated.
Although the employer, Medicare, and Affordable Care Act markets each possess distinct justifications for the rise in premiums, numerous shared factors are contributing to the escalation of policyholders’ monthly expenses. A primary factor is that there has been an increase in the frequency of doctor visits among Americans in recent years, with some individuals receiving more intensive treatments. Experts indicated that this heightened utilization is partially a result of individuals postponing care during the pandemic, resulting in some patients receiving diagnoses at more advanced stages of their diseases. Since the Covid-19 pandemic, there has been an increase in the number of workers utilizing mental health services, a benefit that employers have prioritized for expansion. In the second quarter of 2025, approximately 10.1% of policyholders engaged in a behavioral health office visit, a notable increase from 7.1% during the equivalent period in 2019, as reported by a study of employer-sponsored plans conducted by Mercer, a consulting firm. Furthermore, the expansion of medical clinics and telehealth providers has facilitated greater access to health services, according to Sunit Patel. Additionally, there is an expanding array of providers, including physician assistants, available to deliver patient care. “When you consider all these factors, it becomes evident that we are witnessing increased utilization,” he stated. Another factor is the rise in the number of Americans experiencing chronic diseases, according to Hans Leida. These encompass obesity, diabetes, cardiovascular and pulmonary diseases, cancer, and, in the elderly population, Alzheimer’s disease.
In 2023, research published in the US Centers for Disease Control and Prevention journal Preventing Chronic Disease indicated that over three-quarters of American adults were affected by at least one chronic disease, with more than half experiencing multiple conditions. The incidence of obesity and depression has escalated among young adults from 2013 to 2023, whereas diabetes, chronic kidney disease, and stroke have seen an uptick among middle-aged adults, with chronic kidney disease becoming increasingly common among senior citizens. “People are just not as well,” Leida stated. Cancer, musculoskeletal conditions, and heart disease have emerged as the primary medical conditions contributing to rising employer costs in recent years, as indicated by a study released last year by the Business Group on Health, an organization representing employer interests. According to Jim Winkler employers are observing earlier occurrences of cancers in workers who are younger than the recommended ages for screenings. Moreover, there is a growing trend of individuals receiving diagnoses at a stage where the disease has progressed significantly. Escalating costs, especially in the realm of hospital services, are contributing to an increase in premiums. Similar to insurers, hospitals have been consolidating and acquiring various medical service providers, encompassing doctors’ offices, outpatient facilities, and laboratories. In 2023, one or two health systems dominated inpatient care in nearly half of metropolitan areas, as reported. In 2024, 55% of physicians were employed by hospitals.
A 2022 RAND study indicates that hospital consolidation has resulted in increased prices, and that hospital acquisitions of physician practices generally contribute to rising costs. The report indicates that consolidation among insurers leads to reduced prices for providers; however, consumers experience increased premiums as a consequence of these mergers. Health systems frequently impose facility fees or additional charges when patients seek care at doctor offices or other outpatient providers under their ownership. Numerous health systems acquire additional pricing power by mandating that all their hospitals participate in an insurer’s network or none at all, even spanning various regions, according to Larry Levitt. Employers prefer to maintain a reasonably broad network, which leads to a hesitance in declining requests. “For large employers or insurance companies that operate in multiple markets, they can be held hostage by these ever-growing hospital systems,” he stated. In response to inquiries, the American Hospital Association referenced the statement it issued during one of the House hearings. The analysis underscored the trend of consolidation within the insurance market, indicating that this phenomenon results in elevated premiums and the transfer of costs to both patients and providers. The blockbuster obesity and diabetes medications, despite their high price tags, have caused pharmaceutical costs to soar. The proportion of major firms providing coverage for GLP-1 drugs aimed at obesity increased significantly to 43% in 2025, rising from 28% in the previous year, as reported by KFF’s most recent annual Employer Health Benefits Survey. Simultaneously, close to 60% of large enterprises reported that the utilization of weight loss medications exceeds their forecasts, while two-thirds indicated that the effect on their prescription drug expenditures was “significant.”
Multiple insurers participating in the Affordable Care Act exchanges have indicated that the rising costs associated with obesity medications are contributing to increased premiums for the year 2026, as reported. Blue Cross Blue Shield of Massachusetts has indicated in its rate filing that it will cease coverage of these weight loss medications in 2026, resulting in a projected premium reduction of approximately 3%. GLP-1 drugs represent just one category of pharmaceuticals contributing to the rising costs in healthcare. Rising costs associated with cancer treatments, gene therapies, and various medications are further driving up premium rates. The increase in projected expenditures on physician-administered drugs, including chemotherapy, stands as a primary factor contributing to the rising costs of Medicare Part B, as indicated in the most recent report from Medicare’s trustees. Outpatient hospital care represents an additional facet of healthcare services. In response to inquiries, a prominent trade association representing the pharmaceutical sector asserted that insurers are attempting to “pass the buck” by linking increased premiums to the escalating costs of medications. “The data clearly show that the largest part of the health care system — hospital care — is also the place where costs are the most out of control,” PhRMA stated, referencing CMS data that indicates hospital prices have increased at more than double the rate of retail pharmaceutical prices since 2007.