Health insurance premiums and out-of-pocket costs are predicted to soar in 2026.
Photo courtesy SolStock, iStockphoto
Sticker shock is on its way for millions of Americans, as health insurance-related costs are expected to skyrocket. On Nov. 1, when 2026 federal and state health insurance marketplaces open, many consumers will likely see an Olympic-sized leap in monthly insurance costs, thanks to rate increases. Combined with deep cuts to Medicaid, Americans will soon be feeling the impact of dangerous decisions made by Congress and the Trump administration.
“We are seeing the most regressive health insurance policies in our lifetime,” Chima Ndumele, PhD, MPH, a health policy professor at the Yale School of Public Health, told The Nation's Health.
Uncertainty about the marketplace subsidies is likely to drive up health insurance premiums, given that Congress is expected to let enhanced premium tax credits expire at year's end. Insurers participating in the marketplace in 50 states and the District of Columbia are proposing average increases as high as 20% for the 2026 plan year — twice the increase for 2025. Four percent of the expected premium increases are due to expiration of the tax credits, according to the Peterson-KFF Health System Tracker.
Among other uncertainties driving premium costs are the fiscal year 2025 federal budget, a shrinking economy, potential high tariffs on generic medications and other pharmaceuticals, and an expected drop in marketplace customers, according to Leighton Ku, PhD, MPH, a professor in health policy research at the George Washington University's Milken Institute School of Public Health.
“These factors make the insurance industry say, ‘Gee, we need to build more of a financial buffer into our system.' And that tends to increase premiums,” Ku told The Nation's Health.
Tyler Williams has his blood pressure checked in Terre Haute, Indiana, in August at a Remote Area Medical clinic, which serves people who lack insurance or cannot pay for care.
Photo by Spencer Platt, courtesy Getty Images
Created as part of the Affordable Care Act, health insurance marketplaces allow consumers to purchase standardized plans at competitive prices. Americans who do not receive employer-paid health insurance often use the marketplace to find affordable options.
The enhanced premium tax credits, put into place during the second year of the COVID-19 pandemic to help Americans access health care, helped boost health insurance enrollment by millions. But when the credits expire, people who previously received them could see their out-of-pocket health insurance costs rise an average of 75%, according to KFF research. Costs could rise 90% or more for rural residents who previously received the tax credit.
KFF has set up an online calculator where marketplace customers can estimate how much their health insurance costs might go up. The calculator shows the economic toll on both low- and moderate-income households.
For moderate-income Americans, “not only are they losing the subsidy, which held their premium steady, they now have to pay full-cost premiums,” said Stacey Pogue, MPAff, a senior research fellow at the Center on Health Insurance Reform Georgetown University's McCourt School of Public Policy. “People on middle incomes are going to be hit really hard.”
Marketplace enrollment last year neared 24 million, double that of 2021, according to the Centers for Medicare and Medicaid Services. Because of the price hike, 5 million customers are likely to leave the health insurance marketplace in 2026, the Congressional Budget Office projects.
One of the drivers will be the “marketplace integrity” rule, which became federal law in June. The CMS rule adds several hurdles for customers to leap to receive coverage, Pogue said.
When enhanced premium tax credits expire this year, people who previously received them could see their out-of-pocket health insurance costs rise an average of 75%, KFF says.
Photo by JSDI Productions, courtesy iStockphoto
“The marketplace rule makes it harder and more expensive for people to enroll, even before talking about subsidies going away,” Pogue told The Nation's Health.
Millions to lose Medicaid coverage
Medicaid covers about 21 million people. Nearly half of them are expected to fall off the rolls over several years due to provisions in the fiscal year 2025 federal budget, according to the Congressional Budget Office. And many of them could end up uninsured.
New work requirements, including burdensome reporting regulations, and rules that make it harder to apply for, enroll in and renew Medicaid, are expected to drive some of the decreases in coverage. Both provisions go into effect January 2027.
Science shows that work requirements do not increase employment of Medicaid enrollees. Most people on Medicaid work, and requirements often cause people to lose coverage for failure to report employment or for other administrative reasons.
In 2018, Arkansas added a Medicaid work requirement for adults and 18,000 were kicked off the rolls. State officials reported no increase in employment.
Most Medicaid disenrollment is procedural and by design acts as a barrier to reenrollment to lower the number of people claiming benefits, Ndumele said.
Provisions in the federal budget are estimated to cut Medicaid and the Children's Health Insurance Program spending by $990 billion, according to the Congressional Budget Office. Many states will be unable to make up the loss of federal funding, forcing cutbacks on coverage.
Lindsey Sanders, who has limited health insurance, takes a vision test for a new pair of glasses at a Remote Area Medical mobile clinic in August in Terre Haute, Indiana.
Photo by Spencer Platt, courtesy Getty Images
Despite the bleak outlook, there are steps policymakers can take to support residents, Ndumele said. States could use personal data collected from participants to automatically qualify them for several benefits at once, such as Medicaid, CHIP and the Supplemental Nutrition Assistance Program. Bolstering state outreach to help people navigate the process is another way states can lower Medicaid participation barriers, he said.
Meanwhile, advocates can explain to decisionmakers that more red tape means more people uninsured, and medical costs incurred by their emergency department and hospital visits are absorbed by the public, Ndumele said.
“We know that lack of insurance leads to delayed care or forgoing care altogether,” Ndumele said. “That leads to conditions being diagnosed at advanced stages of illness. Somebody is going to have to pay for that, and it's not going to be the individual. It's generally the taxpayer.”
For more information, visit www.healthsystemtracker.org.
- Copyright The Nation’s Health, American Public Health Association
