Your health insurance is about to go up by the biggest percentage in 15 years
Premiums are set to climb sharply. Here’s why it’s happening, how it could affect your wallet and coverage, and the smart moves to make before renewal or open enrollment.
Context: Multiple industry projections and reporting have pointed to the steepest percentage increase in health insurance premiums in roughly a decade and a half. The details vary by state, plan type, and whether you get coverage through an employer, the ACA marketplace, or Medicare Advantage.
What’s happening—and why it matters
Health insurance premiums are rising faster than they have in many years. For households, that can mean higher monthly payments, bigger deductibles or copays, narrower networks, and more rules to navigate for the same care. For employers and small businesses, it may trigger tough decisions about contributions, plan design, and cost-sharing.
Increases are not uniform. Your actual change depends on where you live, your insurer, how you get coverage, your age, tobacco status, and plan metal tier or benefit design. Some people, particularly those receiving income-based subsidies on the ACA marketplace, may see net premiums change less—or even remain stable—depending on available subsidies and plan options.
The forces pushing premiums higher
- Medical inflation and wage pressures: Hospitals and clinics are paying more for labor, supplies, and capital. Those higher prices show up in negotiated rates and, ultimately, premiums.
- Rebound and shift in utilization: Patients deferred care earlier in the decade; many are returning sicker and requiring more intensive services, imaging, and procedures.
- Specialty drugs and GLP‑1s: Rapid uptake of high-cost specialty medications—especially GLP‑1 drugs for diabetes and obesity—has increased pharmacy trend and driven plan adjustments.
- Provider consolidation and pricing power: Mergers and acquisitions can reduce competition and raise negotiated prices in certain markets.
- Post-pandemic acuity and mental health demand: Rising chronic condition severity and a sustained increase in behavioral health utilization add to costs.
- Reinsurance and stop-loss costs: For self-funded employers and level-funded small groups, rising stop-loss premiums and “lasering” of high-cost claimants push up total costs.
- Risk adjustment dynamics in ACA markets: Shifts in enrollee health status and coding intensities affect transfers among carriers and influence rate-setting.
- Regulatory and benefit mandates: New coverage requirements and evolving prior-authorization rules can change plan costs and administration.
- Geography and site-of-care mix: More services delivered in higher-cost hospital outpatient settings (instead of physician offices) amplify unit costs.
Who will feel it—and how
Employer-sponsored coverage
- Employees: Expect higher payroll deductions, possible increases in deductibles and coinsurance, and more restrictive networks. Wellness incentives and surcharges (e.g., for tobacco) may tighten.
- Employers: Budget strain may lead to contribution changes, tiered networks, reference-based pricing, pharmacy carve-outs, and increased use of care navigation or point solutions.
ACA marketplace (individual and family plans)
- Gross premiums: Many carriers filed notable increases, but your net premium depends on income-based subsidies and the benchmark plan in your area.
- Shopping impact: Even if your current plan’s sticker price rises, switching to a different plan or metal tier could keep your net premium manageable—though networks and deductibles may differ.
Small-group coverage
- Small employers may face above-trend renewals. Alternatives like level-funding, ICHRAs/QSEHRAs, or joining a broader purchasing arrangement may be considered, each with trade-offs.
Medicare Advantage and Part D
- Benefit designs can shift year to year. Watch for changes to monthly plan premiums, drug tiers, prior authorization rules, and maximum out-of-pocket limits.
- For Medigap, premiums can rise with age and claims experience, varying by state and carrier.
Expect plan design changes alongside premium hikes
- Higher deductibles and coinsurance: Plans may raise member cost-sharing to offset rising claims trends.
- Narrower networks and tiered providers: Insurers may push patients toward preferred providers with lower negotiated prices.
- Stricter utilization management: Expanded prior authorization or step therapy, particularly for specialty drugs and costly procedures.
- Pharmacy benefit tweaks: Adjusted formularies, tighter coverage for high-cost drugs, and increased use of biosimilars or site-of-care redirection for infusions.
- Virtual-first options: Some plans emphasize telehealth and care navigation to divert non-urgent care from higher-cost settings.
What you can do now
- Shop proactively during enrollment: Don’t auto-renew. Compare at least three plans across metal tiers or network types; look at total cost, not just premiums.
- Check your doctors and drugs: Confirm in-network status for your preferred clinicians and hospitals, and verify your medications are on-formulary at reasonable tiers.
- Estimate your total annual cost: Add premium, expected out-of-pocket spending based on your typical use, and any employer HSA/HRA contributions.
- Consider HSA-eligibility: If you can manage a higher deductible, pairing an HDHP with tax-advantaged HSA contributions may reduce net costs and build savings.
- Use available subsidies and accounts: On the ACA marketplace, update your income to maximize premium tax credits and cost-sharing reductions if eligible. Through employers, take advantage of HSAs/FSAs and wellness incentives.
- Ask about lower-cost sites of care: For imaging, infusions, or outpatient procedures, check whether high-quality, lower-cost centers are available.
- Review pharmacy options: Talk with your clinician about generics, biosimilars, and therapeutic alternatives. Use preferred pharmacies or mail-order when it saves money.
- Appeal and negotiate when appropriate: If you receive a surprise bill or a coverage denial, use your plan’s appeal process and know your rights under the No Surprises Act for qualifying services.
- For small businesses: Explore contributions via ICHRA/QSEHRA, evaluate level-funded options with care, and solicit competitive quotes. Scrutinize stop-loss terms for lasers and disclosure requirements.
- For Medicare enrollees: During the Annual Election Period, compare Medicare Advantage and Part D plans each year; for Medigap, check for household discounts or community-rated options.
Open enrollment checklist
- Network Are your primary care, specialists, and preferred hospitals in-network?
- Drugs Are your medications covered at a reasonable tier? Any step therapy or prior authorization?
- Costs Premium, deductible, coinsurance, out-of-pocket maximum—how do they compare to last year?
- Coverage rules Any new exclusions, referral requirements, or preauthorization changes?
- Perks Telehealth, care navigation, mental health access, fitness or wellness incentives, and chronic condition programs.
- Tax advantages HSA/FSA eligibility and employer contributions.
How insurers set premiums—and what to watch in filings
Premiums are a projection of next year’s costs plus administrative load and margin. Key ingredients include:
- Medical trend: Expected changes in unit prices and utilization across inpatient, outpatient, professional, and pharmacy services.
- Population morbidity: The expected health risk of the covered pool based on past claims and demographics.
- Risk adjustment and reinsurance: Transfers or protections that stabilize markets like the ACA exchanges.
- Administrative costs: Customer service, technology, compliance, broker commissions, and reserves.
- Margin and volatility: Carriers include a profit/risk margin to buffer uncertainty and large-claim volatility.
Policy and market outlook
Costs won’t be tamed by one lever. Expect debates and actions around:
- Price transparency and site-neutral payments: Efforts to curb higher hospital outpatient pricing for routine services.
- PBM and pharmacy reforms: Greater scrutiny of spread pricing, rebates, and formulary design; expanded use of biosimilars.
- Care delivery shifts: More at-home care, virtual specialty consults, and value-based contracts tied to outcomes.
- State reinsurance programs: Some states use waivers to reduce volatility and moderate marketplace premiums.
- Subsidy policy: The level and structure of premium tax credits meaningfully shape net costs for ACA enrollees; watch for changes.
Frequently asked questions
Will everyone see the same percentage increase?
No. Increases vary widely by state, insurer, plan type, and your personal circumstances. Employer contributions, ACA subsidies, and plan switching can all change your net premium.
Should I switch plans to save money?
Often, yes—if you can maintain access to your providers and drugs. Compare total annual cost and benefits. A lower premium with a much higher deductible may not save you money if you anticipate significant care.
What about GLP‑1 drugs for weight loss?
Coverage is uneven. Some employer and marketplace plans restrict use or require clinical criteria. If these drugs are important for you, verify coverage specifics and out-of-pocket estimates before choosing a plan.
How can my employer mitigate increases?
Strategies include stronger primary care and care navigation, site-of-care steering, pharmacy management (including biosimilars), value-based network contracts, and plan design incentives that guide members to high-value care.
