Rising prescription costs and ongoing medical expenses are becoming a significant burden for some insurance providers and employers. As a result, patients might find themselves footing more of the bill next year.
Many sectors of health insurance could see increased costs in 2026, which could lead to reduced coverage. This shift might require patients to pay more for doctor visits due to alterations in prescription coverage.
Price hikes could be especially pronounced in individual coverage markets, where insurers anticipate discontinuing certain assistance that aids the federal government in purchasing insurance.
“Our goal is to deliver healthcare services while focusing on healthcare development,” stated Larry Levitt, executive vice president at the nonprofit KFF.
Impact Overview
During a recent call to discuss revenue updates, insurance companies highlighted the rising costs they’ve been facing. There’s been an increase in patient volume, with more visits to costly emergency rooms and a surge in mental health treatment claims.
Insurers have noted that healthier individuals are opting out of insurance in individual markets, leaving a higher concentration of high-need patients who generate more claims.
Registrations for Affordable Care Act insurance have increased significantly in recent years. However, tighter eligibility checks and crackdowns on fraud—relaxed during the Covid-19 crisis—have made it challenging for some people to maintain coverage, as pointed out by Jeffries analyst David Windley.
He remarked that those not paying much attention to it are, in a way, distancing themselves.
Prescription medications, especially those for obesity like GLP-1 drugs, are adding to the challenges. Some popular options include Ozempic, Munjaro, Wegovy, and Zepbound.
“Dealing with pharmacy issues is a real headache,” commented Vinny D’Aboul, managing director of RT Consulting in Boston.
Escalating Medication Costs
New gene therapies, which can exceed $2 million for a single treatment, are also straining costs, according to insurance brokers. These medications, designed for rare diseases and some emerging cancer therapies, contributed to claims that surpassed $3 million last year for Sun Life Financial Cover 47.
Financial firms often pick up these hefty bills for employers. Jen Collier, president of Health and Risk Solutions, noted that what was considered expensive a decade ago is now commonplace; claims that were rare just five years ago are becoming more frequent.
While some new drugs might not be widely used, their overall cost contributes to rising expenses, ultimately leading to higher insurance premiums.
“We’re witnessing unprecedented growth in healthcare costs,” said Collier.
Market Projections
Price increases are particularly evident within the individual coverage market. According to KFF’s analysis of state regulatory filings, premiums are expected to rise by about 20% in 2026.
However, actual increases for consumers could be much steeper. If Congress does not extend specific enhanced tax credits that help individuals obtain coverage, these benefits might expire at the end of the year.
KFF estimates that without these credits, the cost of coverage for consumers could surge by over 75%.
Shirley Modlin, a business owner in Powhatan, Virginia, expressed concerns about the escalating prices. She struggles to offer adequate compensation for her 20 employees in the 3D design and manufacturing sector, managing only a $350 monthly refund for the coverage they buy.
Modlin is aware that this amount barely scratches the surface of what her workers are paying, and she fears that rising costs may push some employees to seek jobs at larger companies with better benefits.
“My employees might not prefer working for a big corporation, but sometimes they have to make tough decisions about paying their bills,” she reflected.
Shifting Financial Responsibility
Costs are also rising significantly in the broader market for employer-sponsored health coverage, as noted by benefits consultant Mercer. While employees might not feel the financial pinch immediately—since companies usually bear most of the premium costs—they could notice changes in their coverage options.
Around half of the large employers Mercer surveyed earlier this year indicated they were likely to pass more costs onto their employees, which could mean higher out-of-pocket expenses before reaching maximum deductions.
Changes to Drug Coverage
Regarding prescriptions, patients might see limits placed on expensive obesity treatments.
Some insurance plans could start using separate deductibles for drug and medical benefits, or require patients to pay more for their medications, according to D’Aboul.
Emily Bremer, president of Bremer Group, an independent insurance agency based in St. Louis, noted that changes in coverage might vary regionally.
While employers may not be eager to cut costs drastically, the stability of current coverage might not last long.
“If we don’t address pharmacy costs, we might be facing changes sooner than we’d like to think,” Bremer warned.
