Medical costs could skyrocket as ACA subsidies expire
Millions are at risk of skyrocketing health costs in 2026 if Congress fails to extend health care subsidies.
Millions of Americans who pay high Affordable Care Act premiums in 2026 will face another double-digit rate hike next year, raising the cost of what has become prohibitively expensive for some people.
Health insurers are seeking a median rate hike of 14% in ACA plans in 2027, according to a preliminary analysis by the health policy nonprofit KFF.
KFF analyzed claims from 77 insurance plans in 16 states and Washington, DC. Almost half of insurance companies are calling for premium rates in 2027 to be 10-15% higher than in 2026. Companies selling 20 insurance plans are calling for rate increases of more than 20%.
The final amount is subject to change because health insurers have until July 15 to submit documentation for 2027 ACA premium applications. Federal and state insurance regulators will review the plan before finalizing the rate hike.
The filing marks the second year in a row that insurers in the ACA market are seeking double-digit rate hikes. This rate increase coincides with the repeal of enhanced subsidies that made ACA insurance more affordable for millions of Americans.
“It’s a triple whammy,” Cynthia Cox, KFF’s senior vice president and ACA program director, said of consecutive years of interest rate increases and lack of subsidy expansion. “This is a huge blow to people who don’t have access to subsidies.”
KFF said health insurance companies cited the following factors as factors for next year’s premium rate increases:
- Rising medical costs. Hospital and physician fees are driving up costs, and prescription drug spending is also rising, in part due to the popularity of GLP-1 anti-obesity drugs and specialty drugs to treat conditions such as cancer. Medical and prescription drug spending increased by 10%, a larger increase than in recent years.
- With the enhanced premium tax credit repealed in 2026, more ACA enrollees were required to account for a larger share of their overall health insurance premiums. Some healthier customers will have their ACA coverage discontinued in 2026, leaving fewer enrollees who are sicker and have higher premiums. Insurers expect more of the same to happen in 2027.
- changes to market rules by President Donald Trump’s administration;
Most working-age adults and their families obtain health insurance through their workplace. Most adults age 65 and older are eligible for Medicare, but low-income households are often eligible for Medicaid.
According to the U.S. Department of Health and Human Services, about 19.2 million Americans were enrolled in ACA plans (commonly known as Obamacare) as of February, down from the 23.1 million enrolled by January 2026.
KFF’s report is the second in recent weeks to predict an increase in ACA rates next year. A report from the Georgetown Center for Health Care Reform, released June 18, analyzed claims from health insurance companies in nine states and Washington, D.C. Insurers in those states asked for premium rate increases in 2027, ranging from 6.5% in Vermont to 22.4% in Washington.
“Insurance companies participating in the marketplace are facing significantly fewer patients and sicker populations, which is driving up premiums for everyone,” said Sabrina Corlett, co-director of Georgetown University’s Center on Health Insurance Reform.
