Health Insurance Costs Expected to Rise Sharply in 2026

Health insurance is set to become significantly more expensive in 2026, with premiums projected to rise and coverage expected to shrink across multiple markets. Analysts warn that patients may bear much of the burden as insurers struggle with rising drug costs, surging medical claims, and shifting enrollment trends.

The steepest increases are forecast in the Affordable Care Act’s individual marketplaces, where nonprofit KFF estimates premiums could climb by around 20 percent. If enhanced federal tax credits expire at the end of this year, some customers could see costs soar by 75 percent or more. “We’re in a period of uncertainty in every health insurance market right now, which is something we haven’t seen in a very long time,” said Larry Levitt, a KFF executive.

Insurers point to a range of cost drivers: emergency room visits are up, demand for mental health treatment continues to climb, and healthier enrollees are exiting the market, leaving behind a pool of sicker patients. Enrollment had surged during the pandemic, but new fraud checks and stricter eligibility rules are now pushing lower-use consumers out. Prescription drugs are another major factor, particularly high-demand diabetes and obesity treatments such as Ozempic, Mounjaro, Wegovy, and Zepbound. “Pharmacy just gives me a headache, no pun intended,” said Vinnie Daboul, managing director at RT Consulting.

Rising costs extend to cutting-edge therapies. Gene treatments and specialized cancer drugs carry price tags of more than $2 million per patient. Sun Life Financial reported it covered 47 employer claims exceeding $3 million last year, compared with virtually none a decade ago. “It’s adding to medical cost growth in a way that we haven’t seen in the past,” said Jen Collier, president of health and risk solutions at Sun Life.

Employers, who provide health insurance for the majority of Americans, are also under pressure. While they typically cover most of the premiums, many are preparing to shift expenses to workers through higher deductibles and greater out-of-pocket requirements. A Mercer survey found that about half of large employers expect to pass on more costs in 2026. Prescription benefits may also tighten, with potential caps on costly weight-loss drugs or separate deductibles for pharmacy and medical benefits. “If something doesn’t give with pharmacy costs, it’s going to be coming sooner than we’d like to think,” said Emily Bremer, president of The Bremer Group in St. Louis.

For smaller businesses, the situation could be even more severe. Virginia business owner Shirley Modlin said she already helps employees by reimbursing part of their premiums, but another hike may be unsustainable. “Another price hike might push some to look for work at a bigger company that offers benefits,” she said.