Why Are Marketplace Insurers Raising Rates for 2026?
Insurer filings reveal widespread and substantial proposed rate increases for 2026, with insurers commonly citing increasing health care costs and the expiration of enhanced premium tax credits as key drivers.
Rising health care costs are a key driver of rate changes in most years. Insurers in our sample commonly assumed that medical costs would trend upward by 7 percent to 8 percent in 2026. They pointed to a range of factors, including higher prices charged by providers, higher costs for prescription drugs, increasing use of certain services and medications, the impact of new technologies, and the effect of general inflation.
Most insurers in our sample also raised rates in response to the scheduled expiration of premium tax credit enhancements. Most people who purchase plans in the marketplace get financial assistance in the form of a premium tax credit. Congress “enhanced” these credits in 2021, making coverage far more affordable, but the enhancements will expire at the end of 2025 unless Congress acts quickly to keep them. Insurers anticipate that as coverage becomes less affordable in 2026, marketplace enrollment will decline precipitously, and healthier individuals will be more likely to drop coverage. Remaining enrollees will be sicker on average, driving up average claims costs and, with them, rates. Insurers in our sample attributed from 1 to 14 percentage points of the 2026 proposed rate increases to the expiration of enhanced premium tax credits.
Insurers expect a similar dynamic as a result of policies that add barriers to enrollment. Two federal policies that add enrollment paperwork and eliminate streamlined coverage renewalswere under discussion in the spring, as insurers were developing 2026 rates, but they were not finalized until the summer, after insurers had submitted proposed rates in many states. Many insurers cited these policies as impacting 2026 rates. Insurers expect that these administrative burdens will depress enrollment of people who are healthier on average, compounding rate increases in the remaining smaller, sicker risk pool.
How Will This Affect Affordability for Consumers?
Double-digit proposed rate increases only tell part of the story. The federal premium tax credit provides a cushion against premium spikes, and right now, the vast majority of marketplace enrollees (about 93%) qualify for the credit. If Congress allows the enhanced tax credit to expire, millions of middle-income consumers above the new income cutoff (about $63,000 per year for an individual or $107,000 per year for a family of three) will become ineligible for financial help and face the full brunt of insurers’ rate increases. These individuals will see premiums rise more than 80 percent, on average. Older Americans are disproportionately likely to lose eligibility and will be especially hard hit. A 60-year-old earning just above the income cutoff can expect their premium to more than double.
Even those who remain eligible will see their credit shrink and their monthly premium payments skyrocket. For individuals with incomes from about $23,000 to $31,000 per year, out-of-pocket spending on premiums will rise by 400 percent (from $180 to $905 per year, on average).
Looking Forward
Our review of insurers’ rate filings shows that federal policymaking is leading to substantially higher costs for marketplace consumers in 2026. Although Congress could safeguard consumers by maintaining the premium tax credit at current 2025 levels, it’s not clear whether a majority of lawmakers will agree to do so. With rates being finalized and open enrollment on the horizon, the more than 20 million people who rely on marketplace coverage will soon learn they must pay significantly more to keep their coverage next year.
This blog post is adapted from a larger work by the authors. We’re grateful to Billy Dering and Abby Knapp for their valuable contributions to the research supporting these publications.
