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COUNTDOWN CLOCK BEGINS FOR GIANT HEALTH INSURANCE PREMIUM INCREASES
 
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David Dayen
July 22, 2025
The American Prospect
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_ In around 90 days, millions of Americans will learn about
out-of-pocket cost hikes of more than 75 percent on average. _

, Graeme Sloan/Sipa USA via AP Images

 

Within the next 90 days, the 24 million enrollees in Affordable Care
Act (ACA) health insurance exchanges will get notices about massive
new cost burdens to renew their coverage. This will be perceived as a
direct result of the policies of the Trump administration and
congressional Republicans. That perception has the benefit of being
accurate.

The combination of the One Big Beautiful Bill Act’s (OBBBA) cuts to
Medicaid (and, unless Congress does something about it, to Medicare
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and the failure to extend enhanced ACA tax credits for exchange
participants will cause roughly 15 million Americans to lose their
health insurance, according to the latest
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Those who hang on to pay the higher rates are disproportionately
likely to really need insurance due to medical conditions. This will
tend to create sicker insurance pools, meaning more claims payouts by
insurers.

The expectation of higher costs for insured customers, along with the
pullback of trillions of dollars from the health system, has triggered
insurers’ need for higher premium rates, in a kind of upward death
spiral. Those who remain insured may have to choose between staying
covered and other critical items in their family budgets.

“I don’t think many members of Congress have yet focused on these
big health insurance premium increases coming,” said Larry Levitt,
executive vice president for health policy at KFF. “When they do,
especially for Republicans, it may make them nervous at the prospect
of going before voters right after many of their constituents have
been hit with big premium increases.”

An analysis of proposed premium changes for 2026
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submitted by health insurers this spring and summer reveals the
largest rate hikes since 2018, which were also driven by disruptive
conservative changes
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like the active attempt to repeal the ACA entirely. More than
one-quarter of all insurers are requesting increases above 20 percent,
and only five of the 105 exchange insurers are seeking increases below
5 percent. The median increase is around 15 percent, more than double
the median increase of one year ago and more than double the
underlying increase in the cost of medical care.

The Peterson-KFF Health System Tracker performed this analysis. The
proposals must be approved by state insurance regulators, who can
reject “excessive
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charges. The final changes will be available by the end of the summer.
Enrollees will be informed of these changes in late October and early
November, which will undoubtedly create major sticker shock.

The changes can be primarily attributed to the loss of enhanced ACA
tax credits, which most enrollees (close to 20 million) will feel far
more than the more general increase to insurance rates.
“Out-of-pocket premiums will increase by an average of more than 75
percent
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Levitt said. These enhanced tax credits, initially instituted four
years ago in the American Rescue Plan and extended by the Inflation
Reduction Act, finally made insurance relatively affordable
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for most people. Health insurance was kept to about 8.5 percent of
household income or less because of the new tax credits.

When the tax credits go away in December, the 2026 premiums will snap
back to the old levels, which created a “subsidy cliff
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percent of the federal poverty level. Those households with incomes
above that cutoff will no longer qualify for premium tax credits. As
Levitt explains, that will create a “double whammy” for these
households. They will receive “no assistance with their premiums at
all if the enhanced tax credits expire, plus a big increase in the
underlying premium,” Levitt said.

Levitt added that the premium increases will be most felt in red
states in the South that did not expand Medicaid, and therefore have
more people on the ACA exchanges.

There are smaller factors also creating upward pressure on health
insurance premiums, including tariff changes that could make the cost
of medical equipment and prescription drugs higher. But many of the
proposed insurance increases were submitted _before_ the president
signed the OBBBA, with its trillion dollars in cuts and near-term
damage to the health system
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In addition, the Trump administration’s new “marketplace integrity
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rule, with its many enrollment changes, was only finalized in June,
meaning that insurers may not have taken that into account when
setting rates for 2026 either. That could portend even higher
increases in the future as those changes become more visible.

Even before the OBBBA, insurance companies have been warning all year
about needing rate hikes, withdrawing financial guidance
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replacing CEOs
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and telling investors about hits to earnings
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(This hasn’t stopped insurers from delivering billions to
shareholders in dividends and stock buybacks
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of course.) CVS-owned Aetna plans to leave the ACA exchanges
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entirely next year.

The other lever that insurance companies can pull besides hiking
premiums is denying expensive treatment, which is also happening.
Prescription drug denials, for example, have shot up 25 percent
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in the last decade.

It’s unclear whether this huge cost shift will spur Republicans to
extend the ACA subsidies into 2026. That would be a simple way to
eliminate what will otherwise be a massive cost burden that millions
will receive notification about in just a few months from today.

President Trump’s own pollster found harsh outcomes
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for Republicans if they let the premium tax credits expire, with
enormous bipartisan support for them (79-11 in favor of them among all
voters, including 68-19 in favor from Trump voters). In the
battleground districts surveyed, support for Democrats jumps from
three points to 15 points if the tax credits expire. But House Ways
and Means Committee chair Jason Smith (R-MO) recently called an
extension
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a “big problem for a lot of my members.”

An end-of-year health care package that has been floated could include
a pharmacy benefit manager crackdown that has been stalled for a year
after both parties agreed to it. But Democrats would demand at least
the extension of the tax credits in order to cooperate.

“Republicans may be loath to vote in support of Obamacare,” Levitt
said. “But the alternative is big premium increases for over 20
million people.”

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David Dayen is the Prospect’s executive editor. His work has
appeared in The Intercept, The New Republic, HuffPost, The Washington
Post, the Los Angeles Times, and more. His most recent book is
‘Monopolized: Life in the Age of Corporate Power.’

xxxxxx Moderator's note: Why does David Dayen not write about the
obvious solution that the Democrats at the Federal and State level
have refused to put forward, that is, Medicare for All or by it's
other name, Single Payer Health Care? Obamacare was written to keep
the insurance companies in the health care business. We don't need
them. They don't provide health care.

* Health Insurance; Affordable Care Act; Medicaid; State Insurance
Programs;
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