Health insurance is even less affordable this year – here’s why
(CNN) — Millions of Americans got a nasty reminder this month of just how costly health care coverage is.
Workers, Obamacare enrollees and Medicare beneficiaries are all contending with steeper-than-usual hikes in their health insurance premiums for 2026 – yet another stressor in the nation’s affordability crisis.
Employers’ health benefit costs are expected to rise 9%, the largest increase in several years, though they will try to soften the blow somewhat for workers, according to consultants. Premiums for the benchmark Affordable Care Act plan soared 26%, on average, one of the biggest jumps since the Obamacare plans debuted more than a decade ago. (Enrollees’ actual premium payments are expected to spike 114%, on average, due to the expiration of the enhanced federal subsides, according to KFF, a health policy research group.)
And Medicare Part B premiums, which cover doctors’ visits, outpatient hospital services and other care, shot up nearly 10% this year, the largest increase in four years and second-largest hike, in dollar terms, in the program’s history. The standard monthly premium is now $202.90, up $17.90 from last year, according to the Centers for Medicare and Medicaid Services.
The surge comes as insurers are in the hot seat in Washington, DC. President Donald Trump says he will soon meet with industry leaders to pressure them to lower premiums, while House lawmakers grilled the CEOs of several major insurers in daylong hearings on Thursday.
Representatives from both sides of the aisle challenged the executives, questioning why they are not able to better control costs, especially when they have grown into behemoths that own doctors’ practices, pharmaceutical benefit managers, pharmacies and other health care services businesses that rake in big bucks. Also, lawmakers repeatedly castigated the insurance executives for trying to pad their profits by denying or delaying approval of the care doctors say their patients need.
The insurers responded that they are better able to coordinate treatment and focus on providing value-focused care as multiservice providers, while noting they are required by law to spend at least 80% of premium dollars on health care claims. In addition, they said they are reforming their prior authorization practices to speed and simplify the approval process.
Insurers, however, don’t always feel pressured to reduce costs, said Vivian Ho, a health economist at Rice University. For instance, many larger employers hire an insurance company to administer their health benefits but pay their workers’ claims.
“There’s not as much incentive to drive the hardest bargain if you’re not on the hook for most of the increased prices yourself,” Ho said.
Getting more care
While the employer, Medicare and Affordable Care Act markets each have some specific reasons for the premium increases, there are many common factors driving up policyholders’ monthly tabs.
One top reason is that Americans have been going to the doctor more often in recent years and, in some cases, getting more intensive treatments. This increased utilization stems in part from people deferring care during the pandemic, which has led to diseases being diagnosed in later stages in some patients, experts said.
For instance, since the Covid-19 pandemic, more workers have been accessing mental health services – a benefit that employers have focused on expanding. Some 10.1% of policyholders had a behavioral health office visit in the second quarter of 2025, compared to 7.1% in the same period in 2019, according to a study of employer-sponsored plans by Mercer, a consulting firm.
Also, the growth of medical clinics and telehealth providers has made it easier to access health services, said Sunit Patel, US chief actuary for health and benefits at Mercer. Plus, there’s a growing range of providers, such as physician assistants, to treat patients.
“You put that all together and we’re seeing greater utilization,” he said.
Another factor is the increase in Americans suffering from chronic diseases, said Hans Leida, a principal focusing on health care at Milliman, an actuarial firm. These include obesity, diabetes, heart and lung diseases, cancer and, among the elderly, Alzheimer’s disease.
More than three-quarters of American adults had at least one chronic disease, while more than half had multiple conditions, in 2023, according to research published in the US Centers for Disease Control and Prevention journal Preventing Chronic Disease. The prevalence of obesity and depression increased among young adults between 2013 and 2023, while diabetes, chronic kidney disease and stroke rose among middle aged adults and chronic kidney disease has become more prevalent among senior citizens.
“People are just not as well,” Leida said, echoing a concern voiced by doctors, insurers, experts and others.
Cancer, musculoskeletal conditions and heart disease are the top medical conditions driving up employer costs in recent years, according to a study published last year by the Business Group on Health, an employer advocacy group.
Employers are seeing earlier onsets of cancers among workers younger than the recommended ages for screenings, said Jim Winkler, the group’s chief strategy officer. And people are being increasingly diagnosed when the disease is already more advanced.
Hospital spending
Higher prices, particularly for hospital care, are also driving up premiums.
Like insurers, hospitals have also been merging and scooping up other providers of medical services, including doctors’ offices, outpatient facilities and labs. Inpatient care in nearly half of metropolitan areas was controlled by one or two health systems in 2023, according to KFF. And 55% of physicians were employed by hospitals in 2024.
Hospital consolidation has led to higher prices, while hospital acquisitions of physician practices also tend to drive up costs, according to a 2022 RAND study. (The report also found that consolidation among insurers results in lower prices paid to providers, but consumers face higher premiums following such mergers.)
Health systems often add facility fees or other charges when patients visit doctor offices or other outpatient providers that they own.
Many health systems also gain extra pricing leverage because they insist that all their hospitals be in an insurer’s network or none of them, even across different regions, said Larry Levitt, executive vice president for health policy at KFF. Employers want their networks to be reasonably broad, so they are reluctant to say no.
“For large employers or insurance companies that operate in multiple markets, they can be held hostage by these ever-growing hospital systems,” he said.
Asked for comment, the American Hospital Association pointed to the statement it released for one of the House hearings. It highlighted consolidation in the insurance market, which it said leads to higher premiums and the shifting of costs to patients and providers.
Pharmacy costs
The blockbuster, yet pricey, obesity and diabetes medications have sent pharmaceutical costs skyrocketing.
The share of very large firms covering GLP-1 drugs for obesity soared to 43% in 2025, up from 28% the prior year, according to KFF’s latest annual Employer Health Benefits Survey. At the same time, nearly 60% of large firms said usage of the medications for weight loss is higher than they predicted, while two-thirds said the impact on their prescription drug spending was “significant.”
Several insurers on the Affordable Care Act exchanges cited obesity drugs as pushing up premiums for 2026, according to KFF. At least one, Blue Cross Blue Shield of Massachusetts, said in its rate filing that it is discontinuing coverage of these medications for weight loss in 2026, which will reduce premiums by about 3%.
GLP-1 drugs are not the only medicines that are driving up costs. Expensive cancer treatments, gene therapies and other medications are also contributing to premium increases. Higher projected spending on physician-administered drugs, such as chemotherapy, is one of the main reasons why Medicare Part B costs are climbing, according to the latest report from Medicare’s trustees. (Outpatient hospital care is another.)
Asked for comment, a leading pharmaceutical industry trade group said insurers are trying to “pass the buck” by tying rising premiums to higher cost for medicines.
“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 said in a statement, pointing to CMS data showing hospital prices rising more than twice as fast as retail pharmaceutical prices since 2007.
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