Health insurance premiums on the Affordable Care Act's marketplaces are headed for another sharp increase, with costs expected to jump a median of 14% next year. The spike marks the second consecutive year of double-digit rate hikes, intensifying an affordability crisis for millions of Americans buying coverage on their own.
An analysis of preliminary rate filings from 77 health plans across 16 states and Washington revealed the scale of the problem. Insurers attribute the increases to rising health care costs and the expiration of enhanced federal subsidies that had temporarily cushioned premiums during the pandemic recovery.
Not all enrollees face the same burden. Those earning up to 400% of the federal poverty level, roughly $64,000 for a single person, qualify for subsidies that reduce their out-of-pocket costs. Higher earners get no relief, potentially facing thousands of dollars in additional annual expenses. The subsidy gap also creates a perverse incentive: healthier, more price-sensitive customers drop coverage when rates climb, leaving behind a sicker overall pool that requires more expensive care, which in turn drives premiums higher for everyone else.
Insurers estimate that the deteriorating risk pool has already driven premiums up about 4 percentage points, with similar pressure expected to continue into next year.
The marketplace is contracting at the same time prices are rising. Affordable Care Act enrollment has fallen to 19.2 million people, down roughly 3 million from the prior year. Despite the decline, enrollment remains higher than any pre-2024 level, though the trajectory is troubling.
Emma Wager, a senior policy analyst for the Kaiser Family Foundation, characterized the situation carefully: "When you see a decline in enrollment coupled with such a big spike in premiums, neither of those are exactly comforting signs." She noted, however, that "for now the market is holding strong" overall.
The blame game is already underway. Democrats point to the expired subsidies and accuse Republicans of making health care unaffordable. Brad Woodhouse, president of the Democratic-aligned advocacy group Protect Our Care, called the enrollment exodus "a mind-boggling number of Americans" joining the uninsured ranks, citing "GOP-driven health care cost hikes."
The Trump administration counters that enrollment has declined because of improper and fraudulent sign-ups it is now working to eliminate. "The Trump administration has utilized numerous tools mobilizing a full-scale effort to ensure federal subsidies are going only to those for whom they are intended," an HHS report stated last month.
Yet subsidies tell only part of the story. The underlying cost of medical care itself is climbing faster than historical norms. Coverage of weight loss medications like GLP-1 drugs, other specialty pharmaceuticals, and elevated hospital costs are pushing expenses upward. The cost of medical care and prescription drugs is expected to rise 10% in 2027, outpacing the 8% average growth seen over recent years.
The question now is whether Congress will move to restore enhanced subsidies if Democrats regain control, or whether the current trajectory of higher premiums and shrinking enrollment will persist.
Author James Rodriguez: "This looks less like a market functioning normally and more like one slowly choking itself, with people choosing to go uninsured rather than pay the price."
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