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According to a study by the Kaiser Family Foundation (KFF), proposed premium increases in the ACA marketplaces for 2026 are being driven by several factors, including rising healthcare and specialty medication costs, hospital and clinic staffing challenges, and uncertainty about federal assistance. Insurers are seeking an average premium increase of 20%, which is around 18% higher than the previous year. The study also mentioned that the potential expiration of enhanced premium tax credits and increasing costs for specialty medicines such as GLP-1 drugs for diabetes and weight management as significant contributors to these increases.
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Projected Spike in 2026 ACA Marketplace Premiums Attributed to Rising Health and Drug Costs, Policy Uncertainty
An analysis by the Kaiser Family Foundation (KFF) reveals the causes for the anticipated significant hike in premiums in the ACA marketplaces for 2026, including rising healthcare costs, expensive specialty drugs, and staffing issues among hospitals and clinics. There’s also concern about the potential lack of federal support.
Increasing Premium Rates
According to the KFF study, 312 insurers from all 50 states and the District of Columbia have submitted rate filings projecting an average premium increase of 18%. This is roughly 11% higher than the previous year, and represents the largest nationwide increase since 2018. Estimates suggest that insurers are requesting an average premium increase of about 20%.
Contributing Factors
The analysis highlights multiple factors contributing to these increases, notably rising healthcare costs and the possible expiration of enhanced premium tax credits. Each year sees a continual growth in healthcare costs, which encompass hospitalizations, physician services, and prescription drugs. Specifically, specialty drugs such as GLP-1 medicines like semaglutide, sold under the brand names Wegovy and Ozempic for diabetes and weight management, are significantly adding to the growing pharmacy expenses.
In response to the trend of GLP-1 utilization, Kaiser Foundation Health Plan of Washington stated they anticipate a utilization and script mix increase by 18% in 2025 and 7% in 2026. MVP Health Care of Vermont has documented similar trends with their commercial population’s costs for GLP-1 drugs climbing approximately 25% to 30% each quarter in 2024.
A report by IQVIA showed that spending on prescription drugs rose by 9.9% in 2023, largely due to the higher costs for specialty medicines like GLP-1. This trend is projected to continue through 2028, indicating that increasing drug prices will further burden ACA Marketplace premiums.
Additional Pressures on Healthcare
Beyond prescription drug costs, labor costs, provider consolidation, and inflation are also pushing premiums higher, illustrating the wider pressures within the healthcare system. Health New England, Inc. (Massachusetts) stated, “Physicians and hospitals are encountering economic pressures resulting from supply chain shortages, general inflation, and ongoing workforce challenges. Consequently, providers are seeking increased reimbursement for their services.”
Uncertainty over Federal Policies
In addition to cost pressures, insurers’ rate filings are influenced by uncertainty over federal policy and premium subsidies. The analysis suggests that a considerable reason for the higher premiums could be the possible expiration of enhanced premium tax credits after 2025. This could lead to an over 75% increase in out-of-pocket costs for consumers purchasing insurance through the Marketplace. Also, healthier individuals could potentially drop their coverage, resulting in higher average costs for the remaining group.
UnitedHealthcare’s (UHC) Maryland plan revealed that they applied an adjustment of 1.044 to accommodate the expiration of enhanced premium subsidies through the ARPA and extended by the Inflation Reduction Act (IRA). A representative from UHC said, “Due to the expiration of the enhanced premium subsidies effective 1/1/2026, UHC anticipates a decline in enrollment because of higher post-subsidy premiums. Healthier members are expected to leave at a disproportionately higher rate than those with significant healthcare needs, increasing market morbidity in 2026.”
Varying Premium Increases
The proposed premium increases differ widely across insurers and states, reflecting the complexity of the ACA marketplaces. Among the 312 insurers reviewed nationally, proposals ranged from a 10% decrease to a 59% increase. Approximately 125 insurers requested increases of at least 20%, with four insurers proposing to lower premiums. A review of 105 insurers across 19 states and D.C. revealed slightly lower median increases of 15%.
Importance of Subsidies
For many people enrolled in ACA Marketplace plans, subsidies are crucial for maintaining affordable coverage. Currently, 92% of enrollees receive premium support. However, if enhanced tax credits expire, out-of-pocket costs could surge quickly and severely, potentially leading some people to drop their coverage.
In conclusion, the projected premium increases for 2026 are being driven by escalating medical and pharmaceutical costs, labor pressures, and policy uncertainty, particularly surrounding specialty drugs such as GLP-1s. Policymakers and consumers will be closely monitoring the situation, as changes to tax credits could drastically impact affordability and access.
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