Health insurance is the sleeper midterms issue: Why premiums are spiking

Americans are bracing to pay significantly more for health insurance next month, whether they have Affordable Care Act plans or get insurance through work.

Premiums for some people could be the highest in decades, while others may pay more in the form of out-of-pocket costs like copays or deductibles.

People are getting squeezed by rising costs across income brackets, and experts say affordability woes will truly hit home when open enrollment kicks off next month.

The reasons for the looming spike vary. Higher prices for hospitals and other care are a significant driver of spending by insurers and employers, as is increased utilization of expensive prescription drugs like GLP-1s for weight loss.

The approximately 19 million adults on Affordable Care Act (ACA) plans, meanwhile, are expected to see another year of double-digit premium increases due to many of the same pressures. But eligible enrollees no longer have enhanced subsidies to blunt the increase after Republicans in Congress let them expire last year.

Health cost worries have resonated throughout the midterm elections campaign, and Democrats have made those concerns a centerpiece of their messaging.

A recent poll from health research group KFF found healthcare costs, alongside gas prices, outranked food, housing and utilities as the top economic concern for voters in the midterm elections.

A Pew Research Center survey earlier this month showed 64 percent of Americans said healthcare was a “very important” issue, ranking it higher than immigration, foreign policy, crime or AI.

Insurers who sell plans on ACA exchanges are proposing a median 15 percent premium increase for 2027, according to a KFF analysis of insurer filings across all 50 states and Washington, D.C.

This is the second consecutive year of double-digit premium hikes, and while it isn’t projecting to be as steep as last year, it still represents the second-highest requested rate change since 2018.

Last year’s median nationwide proposed rate change was 18 percent, and the median finalized rate change was 20 percent.

Healthcare gets more expensive every year, and insurers adjust their prices accordingly. For 2027, the median change in the underlying cost of hospital stays, physician visits and prescription drugs was 10 percent, KFF found.

In addition, the ACA exchanges are still adjusting to the consequences of the loss of the enhanced premium subsidies, experts said. For instance, the expiration of the tax credits led to a decrease in enrollment in 2026, with healthier enrollees more likely to drop their coverage.

The subsidies were passed during the COVID-19 pandemic and helped lower monthly premiums for many people who earn too much to be eligible for the law’s existing tax credits.

“People who are younger and possibly in better health, they may opt to drop coverage and remain uninsured, which is leading to the sicker population,” Lo said.

Justin Lo, a senior researcher for the KFF’s program on the ACA, said some of the main reasons insurers cited for raising their premiums for 2027 were expected enrollment declines and a sicker risk pool.

Voters appear to blame Republicans for rising premiums, and Democrats are campaigning on restoring the enhanced subsidies.

Katherine Hempstead, a senior policy officer and health insurance expert at the Robert Wood Johnson Foundation, said restoring the subsidies will make people pay less for ACA coverage, but they’re not a long-term solution for making care less expensive overall.

“It’ll cost less to the people that are buying it, but it’s not doing anything to address how much the healthcare services cost, how much the prescription drugs cost, and that’s what’s, you know, really driving a lot of the affordability problems,” Hempstead said.

Employer-based healthcare is the dominant form of coverage in the country for people under age 65. About 160 million Americans get health insurance through an employer.

Employer health plan costs are projected to rise 8 percent to 10 percent next year, the largest increase in more than 20 years, according to a survey from the benefits consulting firm Marsh.

Those high premiums in part come from increased use of care, expensive new drugs, GLP-1s, and high hospital costs due to consolidation.

As provider prices rise, employer health plans and insurers have historically responded by shifting costs to workers and families through higher deductibles and other strategies that discourage care, like cutting coverage of GLP-1 drugs and aggressive prior authorization.

But companies are running out of ways to shift costs to employees.

“A lot of times that is just taking away options that employees might really want,” Hempstead said.

Last year, job-based premiums for a family of four averaged about $27,000. While employees don’t pay all of that, the cost pressures don’t stop at premiums.

“Often, they have pretty high deductibles and can pay more than $3,000 a year or so in out-of-pocket costs on top of the premium,” said Erica Socker, a research professor at Georgetown University’s Center on Health Insurance Reforms.

“So you start stacking all that up, and you have workers paying out of pocket, between the premium and what they’re paying to use care, in the neighborhood of $10,000 in a lot of cases for a family,” Socker said.

That increase will be felt most by small-business owners and employees.

“If employers are contributing more, it means there’s less money as a firm for investment or for wages or for hiring new people. It crowds out other things that we may think are beneficially good,” said Matthew Rae, associate director of the Healthcare Marketplace Project at KFF.

“We’re seeing really high projected rate increases for small group firms going into 2027, and that that may lead some small firms just to sort of throw their hands up and give up coverage,” Rae said.