Why your health insurance may soon cost a lot more

Health insurance costs in the United States are on track for their biggest jump in at least five years, according to multiple surveys, adding turbulence to an uncertain economy and boosting expenses for millions of Americans already beset by inflation.

In 2026, businesses will be hit with an increase of 9 percent or more, and they are expected to push some of the burden onto employees, according to the research.

For the 24 million enrollees of Affordable Care Act insurance plans, however, the news is far worse. The end of enhanced federal subsidies for that program means their costs are expected to rise by more than 75 percent next year, according to KFF, the nonpartisan health policy organization.

Insurers and employers point to two recent factors to explain the rising prices: the tariffs on pharmaceutical imports being considered by the Trump administration and the high cost of new obesity treatments, called GLP-1 drugs.

With inflation top of mind for many Americans, and broad discontent with health care, the spike in prices in both government-sponsored and private health insurance could make the cost of coverage an issue in the 2026 midterm elections. A Gallup poll in December reported that “Americans’ rating of the quality of U.S. healthcare has fallen to the lowest reading in 24 years, and views of healthcare coverage nationally remain broadly negative.”

Now, even among Republicans opposed to the government insurance program, the rapid rise in prices and the end of the Obamacare subsidies have created worry.

“Voters don’t want to see people losing their health insurance,” according to the pollsters of Fabrizio Ward, a Republican polling firm, which found overwhelming bipartisan support for extending the Affordable Care Act subsidies in a recent poll of 28 competitive congressional districts.

“We are seeing a continued surge in utilization” of the GLP-1 drugs, said Debbie Ashford, a chief actuary at Aon and an author of the report. She said use of the drugs rose 92 percent in 2023 and an additional 56 percent in 2024, and the growth has continued this year at a similar pace. These drugs can cost as much as $800 a month.

As employers seek to limit the bill for GLP-1s, 90 percent of them said they are paying for the drugs only after prior authorization reviews, and nearly half are requiring that patients be substantially overweight as determined by BMI, or body mass index, the Business Group survey said.

Additional cost drivers cited in the forecasts include mental health, chronic conditions and cancer.

The other new force behind the price hikes is the expectation of import tariffs, which would boost drug prices.

Pharmaceuticals are currently exempt from the tariffs imposed by the Trump administration, but the Commerce Department is investigating the impact of drug imports on national security. The president has also said planned tariffs on medicines could be as much as 250 percent.

Some insurers, in legal filings with regulators, have said explicitly that the expected tariffs were raising insurance prices.

A document from United Healthcare of New York states that, to account for “uncertainty regarding tariffs and/or the onshoring of manufacturing and their impact on total medical costs, most notably on pharmaceuticals, a total price impact of 3.6% is built into the initially submitted rate filing.”

While the obesity drugs and tariffs are expected to raise health care costs generally, the most urgent political matter is the fate of the extra subsidies for the 24 million people with Affordable Care Act plans, who could see their premium payments double in January if the subsidies go away. About half of adults with such coverage are small-business owners or their employees, or are self-employed, according to KFF.

The extra subsidies were first provided during the coronavirus pandemic, intended to make HealthCare.gov coverage more affordable, and have been in place for the past five years. During that time, the number of enrollees in Obamacare plans has doubled to more than 24 million, helping to reduce the number of Americans without health insurance. The subsidies have come at a significant cost to taxpayers, however, and extending them an additional 10 years would cost $335 billion, according to the Congressional Budget Office.

Congress has approved the subsidies twice, but now the GOP-controlled House and Senate appear likely to let them expire after December. They previously declined to extend them in the tax and spending bill they passed over the summer.

While some critics have predicted a “death spiral” for the marketplaces if such a trend occurred, others have said the original subsidies are enough to support the program.

“As long as those original subsidies remain in place, there will be no death spiral,” said Cynthia Cox, a researcher at KFF who focuses on the Affordable Care Act. “But some individuals will face hardship.”

There is growing unease among Republicans about the possibility of making Obamacare premiums unaffordable, and they are wary of attacks from Democrats who could accuse them of leaving millions of people without health coverage.

Eleven House Republicans, many of them in vulnerable seats, have signed onto a bipartisan bill to extend the subsidies for another year — enough time to move the issue past the 2026 midterm elections.

Rep. Jen Kiggans (R-Virginia), the bill’s lead sponsor, warned that if the tax credit ends, a Virginia family of four earning $64,000 could see their premiums jump by more than $2,500 a year. A 60-year-old couple earning $82,800 could face nearly $12,000 in higher annual premiums.

Congress could extend the subsidies in a bill to fund the government after Oct. 1. There has also been talk of extending them in a year-end measure, possibly adding them to budget negotiations, but insurers warn that may be too late: At that point most HealthCare.gov customers will have already selected plans.

House conservatives, who have long railed against the Affordable Care Act, are opposed to continuing the extra federal assistance. House Freedom Caucus Chairman Andy Harris (R-Maryland) said that it’s time “to end COVID-era policies” and predicted that “so many Republicans” would vote against it.

But Sen. Josh Hawley (R-Missouri), known for his populist overtures during the debate over cutting Medicaid, said that “we have to do something” to prevent skyrocketing premiums.

“I think anytime somebody’s health care premiums go up by 200 percent when they’re already unaffordable, that’s a problem. We cannot allow that to happen,” he said.