The confluence of rising healthcare costs, new expensive medications, and augmented federal grants has led to significant increases in the premiums for Obamacare’s Affordable Care Act (ACA) marketplace, affecting over 24 million Americans.
A recent analysis of 2026 submissions from insurance companies reveals that the median proposed premium from 312 insurers is set to rise by 18%. In fact, increases largely range between 12% and 27%, with more than 125 insurers looking to raise their rates by at least 20%. This marks the sharpest escalation since 2018, with final premium rates expected to be finalized by late summer 2025.
What is rapidly increasing
Soaring medical costs are primarily driven by hospital services, physician visits, and prescription medications, particularly GLP-1 drugs used for diabetes and weight management. Insurance firms are experiencing healthcare inflation rates of 8% to 10% annually. In some cases, individuals have lost access to their GLP-1 medications as insurers attempt to keep costs manageable.
On top of this, upcoming policy shifts are also a concern. Specifically, the expiration of enhanced premium tax credits from 2021 could lead to increased costs for insured individuals. If these grants end in 2025, subsidized enrollees might see an average 75% hike in out-of-pocket expenses, which is separate from basic premium increases. The rollback of these subsidies accounts for around 4 percentage points of the expected rise in premiums for 2026, as insurers anticipate that healthier individuals may drop their coverage when subsidies lessen, leading to a riskier pool of customers.
Potential tariffs on medical supplies and medications could also drive premiums up by about 3 percentage points.
What does that mean for consumers?
For current subsidized subscribers paying $100 per month, costs could jump to $175 by 2026—an annual increase of about $900. Those paying $200 monthly might see their bills soar to $350. And it’s worth noting that these numbers don’t even account for possible interest rate hikes at insurance companies, which would add to the financial burden.
This situation could have a wider impact. Around 24.2 million Americans currently benefit from ACA Marketplace Coverage, more than double the number just four years ago. Much of that increase is attributed to the current subsidies, which now seem to be on shaky ground.
Even people with private insurance aren’t shielded from the cost increases. Previously, over half of companies reported plans to pass high premium costs on to their employees.
Interests for Congress and Consumer
Even if lawmakers choose to extend subsidies, many families might still confront increased premium costs driven by inflation and medication prices, though several could avoid large portions of these hikes in their out-of-pocket expenses. Yet, without legislative action, the combined consequences could lead to substantial price shocks for many individuals reliant on market coverage.
Furthermore, the 2025 Federal Budget Settlement Act, passed earlier this year, didn’t include renewals for the enhanced grants, meaning subsidies are set to expire at the end of the year unless Congress takes further action.
With Republicans currently controlling both chambers, some key party members are discussing the potential for expansion, partly due to pressure in swing districts and states with high ACA enrollment. However, many in the GOP are reluctant to allocate significant new funding, often viewing it as “insurer relief.” As of now, party leaders have yet to engage in serious negotiations over updates, and many observers regard the chance of passing an expansion without a shift in political priorities as quite low. Interestingly, nearly 77% of the general public, including many voters identifying as Republicans or MAGA supporters, favor extending enhanced premium subsidies.
Experts note that short-term extensions (perhaps one to two years) are still plausible, particularly if supporters are able to connect these measures to necessary government funding discussions. However, without a significant bipartisan agreement or strong prioritization from the White House, the odds of a long-term solution remain uncertain.
