Why Premiums Are Soaring and What It Means for Healthcare

The 2026 Affordable Care Act (ACA) marketplace is preparing for its biggest rise in premium rates since 2018. Across 343 individual ACA marketplace filings nationwide, the median requested increase for individual plans is 18.6%—a 12.5 percentage point jump from 2025. The median requested increase for small group plans is 11.2%. Nearly two-thirds of individual plans are requesting an increase of over 15%.

The factors fueling this dramatic shift include expiring premium tax credits, rising healthcare and pharmaceutical costs, and policy uncertainty. Together, they threaten to disrupt recent stability and progress, coverage for millions of Americans, and the competitiveness of health plans.

“This is a critical year for individual ACA health plans,” says Justin Longua, ASA, Managing Director of Medical Economics & Actuarial Services. “The health plans that are proactive and maintain a long-term strategy rooted in innovation and growth will be the ones that define the future of the marketplace.”

What exactly is driving these premium increases? How could they reshape the marketplace? And, most importantly, how can health plans and insurers proactively respond to stay competitive?

First, let’s look at the numbers.

Key Market Numbers to Know Heading into 2026

Individual Market Rate Distribution (2026)

Rate decreases: 1.7% of filings
0-10% increases: 16.3% of filings
10-20% increases: 37.6% of filings
20-30% increases: 25.1% of filings
30%+ increases: 19.2% of filing

Year-over-Year Comparison

2024: 5.6% median increase
2025: 6.1% median increase
2026: 18.6% median increase

The Forces Driving 2026’s Premium Growth

Four key forces are converging rapidly to drive up health insurance premiums in 2026: the expiration of enhanced tax credits, rising pharmaceutical and healthcare costs, and increased spending on behavioral health.

1. Expiring Enhanced Premium Tax Credits

22 million enrollees (92% of marketplace participants) currently rely on enhanced subsidies to afford coverage. However, these subsidies are set to expire at the end of this year, which will incentivize younger and healthier individuals to drop out of the market while increasing out-of-pocket premium costs by at least 75%. Additionally, newly implemented ACA integrity rules make enrollment and renewal more stringent and complex.

Insurers are struggling to estimate the impact of tax credit expiration on premiums. We’re seeing an average increase of around 5% overall, with significant state-by-state variation. For example, Maryland estimates an average of 9.24% with a range from 1.5% to 13.7%, whereas Tennessee estimates an average of 4.49% with a range from 0.6% to 10.3%.

2. Rising Pharmaceutical Cost Inflation

The prescription drug trend is projected to be 11%. High-priced specialty medications (think newer diabetes and weight management drugs) are driving significant utilization growth across employer and individual markets, which are especially vulnerable and contribute to 0.5-1.0% of overall cost projections.

3. Rising Healthcare Cost Inflation

This year, medical plan costs are projected to rise by a median of 9%. In 2023, hospital spending grew by 10.4%, while physician services spend grew by 7.6%. Individual market insurers face greater pressure and less ability to maintain costs, given their limited negotiating power.

4. Increased Behavioral Health Services Spend

Actuaries forecast a 10-20% trend in behavioral health costs in 2026. Mental health service utilization is at record levels due to reduced stigma, expanded access via telehealth, and ongoing post-pandemic needs. Individual market enrollees typically have higher rates of mental health conditions compared with employer-sponsored populations, creating long-term treatment relationships and specialized programs.

How Rising Premiums Affect Health Plans and Consumers

We expect these rising premiums to push the marketplace into a period of dramatic disruption, from enrollment impacts to operational challenges.

Market Implications

Enrollment Impact: The Congressional Budget Office estimates 4+ million Americans would become uninsured if enhanced credits lapse, with other estimates reaching 11 million. Healthier enrollees will likely drop coverage, concentrating sicker populations in the remaining enrollment.

Metal Tier Shifts: Bronze plans become relatively more attractive as tax credits reduce. Markets will see enrollment shift from gold and silver to bronze due to affordability concerns.

Competition Concerns: Some insurers may be forced to exit unsustainable markets, including rural and smaller markets. This reduced competition leads to further premium increases and potential monopolistic pricing.

Health Plan Implications

Operational Challenges: Plans require enhanced actuarial modeling, targeted retention strategies, and evolved network management through value-based contracts. Large enrollment reductions will increase administrative costs per member.

Risk Selection Pressures: Diverging risk profiles across metal tiers strain the risk adjustment program, with rapid trends, like GLP-1s, happening too quickly for risk models to accommodate. Additionally, increased costs for medical and pharmacy expenses will be shifted to lower premium tiers.

How Health Plans Can Mitigate Risk

Health plans can take proactive steps to mitigate risk and manage costs in 2026 by focusing on long-term tax credit strategies, controlling drug and provider expenses, and improving operational efficiency.

Enhanced Tax Credit Management

Coordinate industry lobbying for credit extension
Partner with brokers and navigators to ensure consumers are filing the proper paperwork to ensure eligibility for tax credits
Redesign bronze plans for downshifting enrollees

Drug Cost Control

Implement real-time clinical decision support
Establish quarterly formulary reviews
Create specialty tiers requiring demonstrated clinical outcomes

Provider Cost Management

Develop centers of excellence with narrow networks
Accelerate value-based care adoption
Focus on markets with sustainable enrollment levels

Administrative Efficiency

Develop shared services consortiums
Invest in AI-powered automation to optimize the existing workforce
Consider strategic market exits and entries where appropriate

So, What’s Next?

As the ACA market stands at the crossroads between long-term stability and dramatic disruption, immediate action is needed. Without congressional intervention to extend enhanced tax credits, premiums are expected to rise by an additional 5%+. Health plans must accelerate the implementation of dynamic formulary management, value-based care, and technology efficiencies.

But the window for action is closing. Decisions over the next 12 months will determine whether between 4-11 million Americans lose coverage, entering a period of chronic instability that could unravel a decade of progress in coverage expansion.

How Voyageur Health Advisory Can Help

Through deep product expertise combined with actuarial insights, we’re proud to help health plans navigate the upcoming market challenges and build sustainable competitive advantages in the following areas:

Strategic Growth & Market Positioning: Identify opportunities, design differentiated product offerings that capitalize on shifting enrollment patterns, bronze-tier growth, and ICHRA market expansion, and manage the risk pool for long-term sustainability.
Operational Excellence & Provider Contracting: Leverage data-driven process improvements and innovative value-based care arrangements that align provider incentives with cost management goals while enhancing member experience.
Performance Analytics: Deploy advanced analytics to monitor market dynamics, competitive positioning, and financial performance, enabling agile strategy adjustments.

Our team is ready to collaborate. Reach out today to learn more.

This analysis is based on publicly available rate filings and industry reports through September 2025. Final rates may differ from proposed increases following state regulatory review processes.