https://www.healthaffairs.org/content/forefront/growth-national-health-expenditures-s-not-prices-stupid?utm_medium=podcast&utm_source=this+week&utm_campaign=forefront

Yesterday, the Centers for Medicare and Medicaid Services released the latest data on national health expenditures (NHE). The headline number, 7.2 percent growth in 2024, is concerning but hardly a surprise. It follows 7.4 percent growth in 2023. This rate of NHE growth is not sustainable. It exceeds general inflation and growth in the gross domestic product (GDP), pushing the share if GDP devoted to health care spending to 18 percent in 2024; the share of GDP devoted to health care is projected to rise to 20.3 percent by 2033. In fact, these figures may be an underestimate of the fiscal burden of the health care system because spending on some things, such as employer administrative costs, are not captured.

Government policies that shield employers, their workers, those seeking individual coverage and participants in public insurance programs from the financial burden of the health care system can mitigate access and affordability problems from the perspective of those groups. But shifting the financing burden from employers and individuals to taxpayers broadly does not solve the affordability problem and will exacerbate already challenging federal and state fiscal situations. Long term fiscal stability of the system requires addressing the underlying growth in spending, not simply who pays.

What Is Not Driving Spending Growth

Given all the attention to prices and insurer profits, it is important to note that those factors are not the main drivers of spending growth—this time, it’s not the prices, stupid. There was virtually no excess medical inflation (medical inflation above general inflation) for 2023 or 2024. In fact, prices for retail drugs (net of rebates) rose at a rate below inflation. There will certainly be cases of rising prices driving spending, but on average, price growth is not the problem. This does not mean high-priced products and services are not an important component of spending growth, but instead it implies that their contribution to spending growth on average stems from their greater use, not rising prices.

Similarly, non-medical spending by private health insurers, which includes profits, grew at 4.4 percent rate, which is below overall spending growth. As the study notes, the increased medical spending was unanticipated by many insurers, which led to reductions in nonmedical insurance expenditures, the subcategory that includes underwriting gains or losses and thus where profits (or surpluses in the case of non-profit insurers) are recorded.

What Is Driving Spending Growth

The main driver of spending growth is greater volume and intensity of care. Volume refers to the number of encounters (admissions, visits, etc.) and intensity refers to the mix of services (high-cost versus low-cost admissions, shifts from an inpatient to an outpatient setting or from an office to a hospital outpatient department, or the use of expensive vs less-expensive drugs). Most decompositions of health spending growth follow the national health accounts framework, focusing on the sector getting paid (hospital, physicians, retail drugs). This may mask some underlying dynamics related to mix that are important.

Coding Intensity

Payment for health care services is based on service codes and the coding system is dependent on coding patterns. Spending may rise if the care delivered is coded differently, even if the underlying delivery of care is unchanged. There is some evidence from recent years of an uptick in coding for sepsis, greater use of higher acuity evaluation and management codes and use of new Evaluation & Management codes.

The drivers of greater coding intensity are unclear. Coding concerns are not new, but new technologies enabled by artificial intelligence (AI) and ambient scribe technology may be accelerating the trend. Some of the coding may be accurate. But if payment rates are based on earlier coding patterns, the payment rates may not be appropriate. As a result, greater coding intensity increases spending and may add very little clinical value.

AI-Enabled Medical Services

Apart from the role of AI technology in supporting administrative activities such as coding, AI offers great potential to improve the value and efficiency of care. New AI-enabled services, particularly diagnostic services, can better direct care, eliminating unnecessary, potentially harmful, and costly services.

It stands to reason that such tools will lower spending, but realization of that promise depends on how AI services are priced and how providers respond. If the new services are paid for by fee for service, price will likely exceed marginal cost and use may grow beyond what would be optimal. (Because of the potential for quality improvement, the optimal level of use would be above the money-saving level.) Moreover, such tools may require use of other, potentially expensive diagnostic services. For example, AI tools that help diagnose heart disease may require CT-scans that would otherwise not occur. Finally, the productivity gains from AI may free up resources to deliver services that would otherwise not be used.

We are very early in the adoption of AI-based services into the health care system, and it is unlikely that such services contributed significantly to the 2024 spending trend. But going forward, monitoring and evaluating the impact of these services will be a first order concern.

Changes In Health Care Infrastructure, Provider Consolidation And Shifts In Patient Flows

The infrastructure of health care is constantly changing. New outpatient facilities (independent and system-affiliated) are opening and providers are consolidating. Private equity firms have a growing presence in the market. These developments may have important consequences for spending. The shift to lower price settings may lower spending, but integration of physician practices with health systems may raise it because, in general, systems are paid more. Expanding infrastructure may also lead to greater utilization of care. Shifts in patients towards higher-priced providers within sectors (e.g., from low-priced to high-priced hospitals) may also increase spending.

Much of the related policy attention has been focused on antitrust issues and private equity, both of which are important, but the impact of the evolving infrastructure and changing patient flows extends well beyond these issues and remains poorly understood. The key issue is the balance between, on the one hand, efficiency-generating shifts toward lower-priced or better-quality care and, on the other hand, inefficient shifts towards high-priced settings, higher-priced providers within settings, or potentially inappropriate use of services.

Use Of Expensive Products

 A non-trivial, though likely not the dominant, driver of spending growth is the increased use of expensive products. Prescription drugs, both in the retail setting and those covered by the medical benefit, garner the most attention. GLP-1s, used to treat diabetes and obesity, are the sentinel example. Despite declines in prices, increased utilization drove up spending on these medications. Yet other products matter as well, including skin substitutes, whose use has skyrocketed. As with all products and services, though more saliently for expensive ones, the core policy questions involve limiting use to situations where the clinical benefit is sufficient to justify the cost (net of any offsets elsewhere) and restraining prices without unduly hampering innovation. Policies such as greater bundling of similar medications, reforming the Average Sales Price+ 6 percent payment policy for drugs under Medicare Part B. and ensuring value is a cap on price should be explored. CMS has been very active in this area, launching several new financing models, including the GLOBE model, the GUARD model and the Generous model, on top of very active implementation of Inflation Reduction Act policies related to drug pricing. Monitoring the impact of these demonstrations on prices, spending, access and innovation will be important.

Looking Forward

Health care spending growth continued at an unsustainable pace in 2024. Early reports suggest spending growth in 2025 will remain elevated. Such growth challenges policy makers and private payers alike.

Reactions often involve efforts to shift the financial burden to other stakeholders. For example, reductions in the federal share of Medicaid spending (the federal Medicare assistance percentage, or FMPAP) shift funding from the federal to state governments; decreases in marketplace subsidies shift some of the burden to individuals, as do employer increases in employee premium contributions. In some cases, shifting who pays may induce reductions in aggregate spending, but such decreases—for example in the case of reductions from higher out-of-pocket cost sharing—may result in lower use of high value services. Our ultimate goal should be to reduce spending in the least deleterious manner possible.

In that spirit, several options include:

• Focusing on strategies to reduce low-value care and inappropriate coding in fee-for-service settings. The WISeR model and private utilization management programs seek to accomplish this goal. The devil is always in the details.
• Improving designs of alternative payment models (APM) that create incentives for providers to practice efficiently. Benchmark-setting rules and risk adjustment are likely the greatest leverage points, but it is also important to consider APM programs holistically; Maintaining too many constantly evolving APM experiments will likely be counter-productive.
• Regulating areas where markets fail. This may include price regulation (including Medicare fee schedule improvement), standardization to support choice, and simplification of administratively burdensome regulations (including broad revision of programs to improve quality). System simplification should be a guiding principle
• Improving market mechanisms to induce more efficient care-seeking behavior and pricing, which may involve antitrust enforcement, providing better consumer information, improving choice support tools, and creating benefit packages based on the principles of value-based insurance design. But market mechanisms have limits and past efforts have not proven very successful. Thus, pursuit of more efficient markets should not forestall necessary regulation.

The specifics of these strategies will be central to establishing a fiscally sustainable health care system. But the spending growth we have experienced, and will experience in the future, reflect system design choices. Our ability to support access to high-quality care at a cost that is affordable in aggregate will require redoubled efforts to reform both health care financing and delivery.

http://www.chcf.org

Health care costs hurt Californians every day. Millions can’t afford the care they need. More than half of all Californians skip or delay getting care because it costs too much.

How did we get here?

Health care is too expensive for people in large part because underlying costs in our health care system have grown unchecked for decades. Underlying costs are the “base ingredients” that determine how expensive health care is. Think of things like hospital operating costs, prescription drug prices, and doctor fees — when these costs go up year after year, they get passed on to patients through higher premiums, bigger deductibles, and larger medical bills.

The solution to the affordability crisis isn’t to slash health care spending across the board — that often makes things worse for patients. Instead, we need to be smart about cutting that 25% that doesn’t provide any value for patients.

Some of that rising cost has produced things we actually want, such as breakthrough treatments that save lives, cutting-edge medical equipment, or hospitals retrofitted to withstand earthquakes.

But around 25 cents of every dollar in our health care system doesn’t help patients get better care or become healthier. In 2020, it was estimated that this added up to as much as $73 billion dollars a year in California’s health care system. Where does that money go? The top three culprits are:

• Red tape, paperwork and other administrative waste
• Excessive profits for companies that can charge unfair prices because they have no, or not enough, competition
• Treating serious illnesses that could have been caught early or prevented altogether with basic primary care.

The solution to the affordability crisis isn’t to slash health care spending across the board — that often makes things worse for patients. Instead, we need to be smart about cutting that 25% that doesn’t provide any value for patients. Sometimes that might actually mean spending more money upfront, like making sure everyone can see a primary care doctor, to save money down the road by keeping people healthier.

This work is challenging, but it’s critical. Millions already can’t afford health care. If Californians’ health care costs keep rising the way they have been, even more families will be left behind.

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The Problem and Why It Matters

Unchecked growth in the underlying costs of our health care system has driven total health care spending — from families, governments, employers and others combined — to more than triple since 2000, far outpacing inflation, economic growth, and wages.

Here are just a few key examples of the impact on California families:

Health insurance is increasingly becoming unaffordable for California families.

• Over the last 20 years, health care premiums for job-based insurance have grown nearly twice as fast as wages in California. Deductibles have grown nearly three times as fast as wages.
• The average premium for a family health plan through job-based insurance in California was over $28,000 in 2025.
• Three out of four workers with single coverage through their employer had a deductible in 2025, averaging roughly $1,600. One in ten had a deductible of more than $3,000.

Families are skipping care or going into debt.

• More than half of all Californians (53%) skipped or delayed care in 2023 because it cost too much. For families with low incomes, that number jumps to 74%.
• Of those who skipped care, 54% say their health got worse.
• 38% of all Californians report carrying medical debt. For Californians with low incomes, that rises to 52%.

Overview of the 3 Reasons

1. Administrative Waste

Health care requires some office work — doctors and hospitals have to schedule appointments, send bills, and keep records. But in the U.S., we spend way too much time and money on administrative tasks, which does nothing to make care better for patients.

Why Does This Happen?

Our health care system is complex. Different hospitals, doctors, and insurance companies often all use different computer systems for clinical data, billing, and administrative tasks. They can’t easily share information with each other. This means:

• Staff in different parts of the system spend extra time entering the same information over and over;
• Insurance companies and hospitals have to hire more people just to handle paperwork; and
• Simple tasks become complicated and expensive.

How Much Money Gets Wasted?

Researchers in 2020 estimated that administrative waste cost the California health care system nearly $21 billion a year, making it the number one source of health care spending that doesn’t do anything to help patients or improve care.

How This Hurts Patients

Administrative waste doesn’t just cost money. It also hurts patient care:

• Doctors spend less time with patients because they’re busy with forms.
• Patients wait longer to get care.
• Doctors have to call insurance companies over and over to find out what’s covered, and this can delay treatment when people need help.

Take a deeper dive into Administrative Waste →

2. Unfair Pricing and Too Few Choices

Health care spending depends on two things: 1) how much care people get and 2) the prices that are charged for that care. In California, we have a big problem with pricing.

Same Care, Very Different Prices

The same medical procedure can cost wildly different amounts depending on where you go. For example, a knee replacement might cost $50,000 at one hospital and $70,000 at another. This happens even when both hospitals provide the same quality of care. In other words, the more expensive hospital is not necessarily better.

Lack of Competition Drives Prices Up and Hurts Patients

In many areas, there isn’t enough competition among health care organizations. For example, big hospital systems are buying up smaller hospitals. In some areas, there’s only one major hospital system left. Likewise, a few large insurance companies control most of the market. In some areas, one insurance company dominates.

When hospitals and insurance companies don’t have to compete:

• Prices can go up without any improvement in care quality.
• Patients have fewer choices about where to get care.
• Families pay more for the same treatment.
• Some areas become “take it or leave it” markets.

This creates unfair contracts where the biggest companies can demand high prices because patients have nowhere else to go.

Take a deeper dive into Unfair Pricing and Too Few Choices →

3. Not Enough Prevention in Health Care

When doctors find health problems early, they’re much easier and cheaper to treat. For example:

• Regular cancer screenings can find problems before they become serious cancer.
• Checking on people with heart problems can prevent expensive hospital stays.
• Treating diabetes early prevents costly complications later.

Too often, though, people don’t get these early checks because there might not be a primary care doctor that can see them when they need it. By the time they see a doctor, their problems are much more serious and expensive to fix.

We Don’t Spend Enough on Prevention

Most prevention happens when you visit your primary care doctor for regular check-ups and basic care. But the U.S. has a big problem: We spend only 5 cents of every health care dollar on primary care, while other wealthy countries spend three times that amount.

California research shows that when provider organizations spend more money on primary care:

• Patients get better quality care.
• People are happier with their treatment.
• Fewer people end up in the emergency room.
• Fewer people need expensive hospital stays.
• Overall health care costs go down.

We could save billions of dollars by helping people stay healthy instead of waiting until they get really sick. It’s like fixing a small leak in your roof instead of waiting until your whole ceiling falls down.

Take a deeper dive into Not Enough Prevention →

Solutions

The good news is that we can fix these problems. California is working on several smart solutions right now.

The Office of Health Care Affordability

Created in In 2022, the Office of Health Care Affordability (OHCA) aims to break the cycle of the last decades and make sure that underlying costs in the health care system don’t continue to spiral out of control year over year.

Cost Growth Targets

In 2024, OHCA set an important new target: Total spending by health care’s major players — like hospitals, insurance companies, and large medical groups — can’t increase by more than 3% each year. That’s roughly how much a typical California family’s income grows every year. The target will be implemented in phases over the next several years.

This creates a powerful new incentive for these health care organizations to manage their underlying costs, rather than allowing them to grow unchecked and passing on increases every year to patients. Over time, this should help make health care more affordable for families.

If a health care organization exceeds its spending growth target without a good reason, OHCA will take increasingly serious enforcement actions, starting with guidance to the company on how to meet the target all the way to financial penalties. Penalty money will go into a fund and then back to California families to help them pay for their health care.

Making Sure Quality Stays High

Spending caps are intended to target things like administrative inefficiencies and monopolies, not quality of care.

To ensure health care organizations are focusing in the right places, OHCA is charged with ensuring:

• Patients can still get the care they need.
• Care quality stays just as good.
• Hospitals and clinics have enough doctors and nurses.

OHCA is taking steps to address unfair pricing by reviewing health care mergers and acquisitions.

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As we ring in the new year there is one thing – maybe the biggest thing – lingering from 2025 that can’t be dropped: The alarming state of health care.

Every aspect of the health care system feels like it’s working against its customers by prioritizing profits over care.

There are significant signs we could be at a breaking point.

• More Americans than ever are opting to go without health insurance. A Gallup poll found 1 in 3 are considering running that risk, saying they can’t afford the costs.
• For the first time in history, concern for rising health care costs is stride for stride with housing and food costs as American wages are struggling to keep pace. For many income levels they feel left permanently behind.
• And not only are people paying record-high premiums, what they have to pay for prescription drugs at the pharmacy counter is breaking the bank as insurance companies have gobbled up pharmacy benefit managers to capture more and more of what we spend on health care.

• The number of pharmacies serving the country’s sick has dwindled to the lowest levels in more than 50 years. Rite-Aid, which once operated more than 5,000 stores across the country, closed all of its locations and declared bankruptcy last year. Thousands of independent pharmacies have also closed, largely because of the stranglehold PBMs now have on the prescription drug supply chain. The closures have created hundreds of pharmacy deserts, leaving patients with a dwindling number of low-cost and convenient options.
• Medicaid cuts mandated by Congress and the Trump administration last year are expected to cause more rural hospitals to close. More than 100 closed in the last decade and hundreds more are on the brink, according to a Boston University study. Health care is in such a bad spot it’s near the top of the 2026 Congressional agenda. Democrats want to restore the enhanced subsidies that made coverage affordable for the more than 20 million Americans who rely on the Affordable Care Act marketplace for their health insurance but most Congressional Republicans say the subsidies are a waste of money. Despite all that, there’s pessimism that politicians have the appetite for real change.

“We are frogs in a boiling pot,” said Eric Pachman, co-founder of the prescription drug watchdog 46 Brooklyn and data analyst on Wall Street. “Every year health care plans cost more but the coverage we pay for gets crappier.”

Pachman was recently at home when he got a call from a close relative whose son was in the middle of an allergic reaction. The family didn’t have health insurance because the premiums were beyond their means.

“He gave his son an Epi Pen and then drove to the hospital close by,” Pachman said. “He sat there for a while with his son in the parking lot to make sure he didn’t get worse but he didn’t go in.”

Americans are making those alarming decisions while health insurance companies continue to make big profits.

The country’s three largest health insurance companies and their in-house pharmacy benefit managers have rocketed toward the top of the Fortune 500 list of richest companies.

UnitedHealth has become America’s third-richest company behind Walmart and Amazon. In 2024, the company, which has about 30 million Americans enrolled in its health plans, brought in more than $400 billion in revenue, according to its financial filings.

CVS Health is just behind UnitedHealth at No. 5 on the country’s Fortune 500 list, bringing in nearly $373 billion in 2024. Cigna is 13th with $247 billion in revenue.

Health care alarms similar to sirens of 2008 housing collapse

The warning signs of this health care crisis bear a haunting resemblance to the 2008 housing market crash.

• Cost vs. Income: In 2006, the average employer-sponsored family health care plan cost $11,381, representing 23% of the average salary. In 2026, the average plan is expected to exceed $27,000 against an average salary of $84,000 — a staggering 32% of income.
• Shifting Risk: Just as risky mortgages were offloaded onto consumers, employers have shoved a larger portion of health care costs onto their workers.
• Debt: Half of American adults now report they could not pay a $500 medical bill without going into debt.
• Opacity: Much like the complex derivatives in mortgages in 2008, PBMs and insurers refuse to make their pricing public. This lack of transparency leaves patients fearing to open their mail after a hospital visit.

The sad joke in Washington D.C. right now is that everyone keeps talking about the price of health care but no one knows what the actual prices are.

In that Gallup poll, those surveyed gave the U.S. health care system a grade of D+.

“Our government continues to apply band-aids to a bloated pricing system rather than prescribing real, system-wide solutions,” said Antonio Ciaccia, co-founder of the pharmacy drug data site 46Brooklyn.com and former head of government affairs for the Ohio Pharmacist Association.

Lawmakers in more than a dozen states have tried to rein in insurers and their PBMs with lawsuits and regulations. Those lawsuits have led to more than $400 million in payouts by the big three health insurers and their subsidiaries.

Despite that the system keeps on going.

After years of battling insurers and their PBMs, Ohio’s Republican Attorney General, Dave Yost, came to the conclusion that any major reforms would have to come at the federal level.

He formed a coalition with 39 other states and has made repeated trips to Washington D.C. urging Congress to act.

“PBMs were originally intended to reduce the financial burden on Americans for prescription drugs, but the reality today is starkly different,” Yost said. “Instead of prioritizing the interests of patients, PBMs have shifted their focus to maximizing profits and marginalizing local pharmacies from the marketplace.”

Pachman also said if more people do opt out of insurance they will still go to hospitals for medical care.

“Hospitals cannot turn those patients away because they are legally required to treat them,” Pachman. “That means the cost burden will be shifted to those that do pay for insurance.”

While any type of significant reforms seem unlikely, many states are at least starting to ban medical debt from credit reports.

Fifteen states have the ban in place and Ohio, Alaska, North Carolina and Michigan are exploring similar statutes this year.

Chris Deacon, an attorney, author, health care reform advocate and former director for the New Jersey treasury department said the only incentive right now is for insurers to keep growing the $5.3 trillion spent on health care in the United States in 2024.

“There’s no incentive to control prices,” Deacon said. “And there’s no transparency whatsoever in any of this.”

https://www.axios.com/2026/01/07/drug-prices-trump-medicare?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

The drug price hikes that are helping drive the health affordability crisis will continue for the rest of President Trump’s term, key industry stakeholders are now predicting — despite his deals with drugmakers and Medicare negotiating lower prices.

The big picture: 

Insurers, drug supply middlemen and hospitals who represent 13% of all pharmaceutical purchases predict single-digit price increases for branded drugs over the next three years, according to a new survey by TD Cowen.

• The increase will be largely driven by pricey new medications, such as drugs for cancer, diabetes and obesity, as well as cell and gene therapies, the purchasers said.
• Drugmakers are already set to raise prices this year on at least 350 medications, including common vaccines and cancer treatments.

State of play: 

Democrat and Republican policymakers have prioritized lowering drug prices in recent years in response to mounting public concern over health costs.

• Congress during the Biden administration passed the Inflation Reduction Act, allowing Medicare to negotiate lower prices for select drugs.
• Trump has made direct deals with drugmakers for decreased U.S. prices on certain products.

Yes, but: 

TD Cowen’s latest annual drug purchaser survey shows these policy interventions aren’t driving prices down, at least in the near term.

• Insurers, pharmacy benefit managers and other payers said they expect their cost of acquiring a drug to increase by 8%, on average, over the next three years. They gave the same figure when surveyed in 2024, 2023 and 2022.
• Prices for generic drugs are predicted to increase by 2% over the same period.
• “As long as biopharma delivers innovation, we see no change in the upward trend in drug prices,” TD Cowen wrote in its analysis.

By the numbers: 

44% of purchasers surveyed expect Medicare drug negotiations to have a modest impact on cost, and another 30% said they don’t think they will have any impact.

• But 74% said they think drug usage will increase over the next five years due to the policy changes and the IRA’s out-of-pocket cost protections for seniors.

Reality check: 

Patients aren’t necessarily going to see an out-of-pocket increase as drug acquisition prices rise, due to rebates and other discounts.

• But payers often pass increased costs along to patients, including by raising monthly premiums.
• Net drug prices increased one-tenth of a percent in 2024 after accounting for rebates and discounts, per an IQVIA report published in April.

What they’re saying: 

Patients “bear an unfair burden as out-of-pocket costs have risen faster than the net prices paid by PBMs and insurers,” PhRMA spokesperson Chanse Jones said. “At the same time, innovation … continues to skyrocket.”

• Advocacy group Patients for Affordable Drugs said in response to the survey results that the IRA’s reforms are working for seniors.
• “[T]hat’s exactly why expanding and protecting the law matters,” Alyson Bancroft, director of policy, legislation and alliances, told Axios in an email.
• Health and Human Services communications director Andrew Nixon told Axios the agency doesn’t weigh in on third-party analyses, but said HHS continues to advance policies to lower drug costs so patients can afford treatments.

What we’re watching: 

Purchasers expect coverage of obesity drugs to grow over the next three years.

• Almost 30% of respondents said they currently have very limited coverage of GLP-1s for obesity, but nearly 20% said they expect to offer complete coverage for a finite amount of time within three years.
• Medications for diabetes, obesity and rheumatological conditions were cited as likely to have the greatest decrease in price over the next three years. That’s due to coming patent expirations and increased competition among advanced products, TD Cowen noted.

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In mid-December, members of Congress members left Capitol Hill for the final time in 2025, thus ensuring that the year would end with a failure arguably more significant than anything they accomplished during the prior 12 months: the end, despite a widespread public clamor for action, of subsidies put in place during the pandemic that made premiums of ACA marketplace plans affordable for millions of Americans.

Although important health care stories often fail to get much media attention, the failed efforts – mostly, but not exclusively, by Democrats – to save the Affordable Care Act/Obamacare subsidies were different. As patients from Maine to California opened their yearly renewal letters, many were shocked to see their monthly premiums for 2026 would be doubling or even tripling – right when the rising cost of living was already the No. 1 voter concern.

But there’s another aspect to America’s looming health care crisis that almost no one is talking about.

This is the other side of the coin – the out-of-pocket expenses that everyday consumers pay for doctor visits or prescription drugs – because of higher deductibles, or because of the growing number of patients who will risk not having any insurance at all next year because they can no longer afford it.

Even before the new year began, many Americans were dreading a double whammy of skyrocketing premiums and a sharp spike of what they expect to pay on top of that, out of their own pockets.

For example, Doug Butchart of Elgin, Ill., told ABC News that while his wife Shadene – who is living with the neurological disorder amyotrophic lateral sclerosis (ALS) – paid about $3,000 in out-of-pocket costs last year, that’s expected to rise as high as $10,000 in 2026, on top of monthly premiums that are tripling with government inaction on the ACA subsidies. It’s all more than the senior couple currently earns from Social Security.

Of course, millions of other Americans who switched to insurance plans that trade lower monthly premiums for sharply higher deductibles are taking an economic gamble that won’t play out until they see how healthy they are in 2026. In particular, those joining the surge of patients switching their ACA health coverage from the common Silver plan to the lower-premium Bronze coverage could pay thousands more as a result.

An analysis by KFF, the health care think tank, found that the average deductible in 2026 for patients who sign up for a Silver plan, assuming no reductions for cost sharing, will rise to $5,304, but for those who opt into a Bronze plan, the average deductible will spike to $7,576 – meaning a more than $2,000 higher outlay for sicker patients who max out on their covered expenses.

Katie Keith, director of Georgetown University’s Center for Health Policy and the Law and a former Biden administration aide, said the skyrocketing cost of insurance means “people are so premium sensitive that they might still go with Bronze and kind of leave money on the table – then they’re facing at least a $9,000 deductible, or whatever out-of-pocket max is, and just huge burdens.”

Keith and other health policy experts see a perfect storm of negative factors for higher out-of-pocket expenses in 2026 – from the impact of generally rising health costs to the added burden of government inaction or indifference in Washington. Among the factors behind a looming crisis:

• Last summer, the Trump administration finalized new rules for the ACA that changed a key calculation and thus increased the maximum in out-of-pocket expenses that can be set by insurers – a ruling that also affects the millions of Americans who receive health insurance through a private employer.
• The new math proposed by the Trump administration’s Centers for Medicare and Medicaid Services (CMS) adds yet another 4% hike on top of an already expected steep increase. The higher limit means individuals in some plans will pay $10,600 before their insurance kicks in, with a bump to $21,200 for families – an overall increase of 83% for individuals and 67% for families since the out-of-pocket maximum established by the ACA went into effect in 2014.
• The Center on Budget and Policy Priorities reported that, because of these changes, a family of two or more people on the same plan could face an additional $900 in medical bills if a family member is seriously ill or injured in 2026.
• Increasingly, employers are putting more of the economic burden on their workers for health care costs, especially through higher deductibles. For one thing, the KFF Employer Health Benefits Study has found that – for employees whose coverage carries a deductible, on individual plans – that average out-of-pocket cost has outpaced inflation and more than tripled in less than two decades, from $567 in 2006 to $1,887 in 2025.
• What’s more, increasing pressure for workers to share the cost burdens of their health insurance has also caused more employer plans to offer a higher deductible option, and more people are signing up for that risk. Federal data shows that while only 38% of private-company employees had the option for a high-deductible plan in 2015, that number has now risen to more than half.
• Perhaps the biggest factor is the end, for now, of the tax credits that had been holding down the cost of monthly premiums for ACA marketplace coverage since the COVID-19 epidemic. In states gathering data about early enrollment trends this past fall as higher premium notices went out, the shift away from traditionally popular Silver plans into Bronze coverage, with its higher out of pocket costs, has been dramatic.

For example, in California, where the Covered California program is considered a trailblazer in public health plans, officials told NBC News they’ve seen a “substantial” movement of enrollees choosing the Bronze plans with the highest out-of-pocket deductibles. Typically, officials reported, about one in five new enrollees go with the Bronze option, but for 2026 that number has soared to more than one-third. It’s a similar story in Idaho, where officials told NBC that Bronze enrollments are running 5% higher than normal, with most moving from Silver plans.

“There’s a lot yet to be seen, but there are definitely some early warning signs in terms of the decisions consumers are having to make in reaction to the changing federal policy,” Jessica Altman, executive director of Covered California, told the network.

Even more worrisome, however, is the number of Americans who are cancelling their ACA marketplace coverage altogether, because – all evidence suggests – they can no longer afford the premiums for any level of plan. In Pennsylvania, after families began receiving notices that – in many cases – their premiums had doubled, officials reported that about 40,000 people dropped their coverage, which is double the total from the 2024 enrollment period. What’s more, new enrollments in the Keystone State are also running about 20% lower than this time last year.

This is on top of a growing number of people – especially in the younger age brackets – who are switching to other low-cost alternatives that also are essentially a big gamble. These include so-called short-term plans, which are not compliant with ACA coverage requirements and that often come with annual or lifetime caps on coverage, don’t cover certain critical expenses like prescription drugs or paternity care and can penalize patients with preexisting conditions. There are also so-called catastrophic plans, which usually carry the maximum allowable deductible and which – in recognition of the worsening health insurance climate in the U.S. – have been expanded as an option to consumers over age 30. You may have even heard ads for faith-based sharing plans, whose members pool their expenses. People who sign up for those plans often find out they are not covered for a serious illness.

No wonder growing numbers of us are more anxious about the cost of health care than any time since the ACA was enacted in 2010 – perhaps ever. In November, a West Health-Gallup survey found that 47% of U.S. adults are worried they can’t afford health care next year – the highest number since the survey began in 2021. Those surveyed cited the rising cost of out-of-pocket requirements for prescription drugs in particular. And the number of Americans who say the cost of health care is causing “a lot of stress” in their daily lives has nearly doubled since the survey began, to 15%.

Georgetown’s Keith noted that – with patients and their families getting hit with higher costs on all sides – both the federal government and individual states have shown there are legislative actions that can reduce out-of-pocket costs for these anxious consumers. These include the federal No Surprises Act, which was signed into law by President Donald Trump in 2020 to address surprise medical bills, and a $2,000 annual cap on prescription drug costs for Medicare beneficiaries that went into effect in 2025 (it will rise to $2,100 this year), as well as various state efforts to curb tack-on facility fees or impose limits on insulin charges.

“There are many different flavors – ways that patients are getting charged,” Keith said. Indeed, that’s the bad news, since many of the fixes that lawmakers have been working on feel like bail-out buckets of water against a tsunami of rising medical expenses that in 2026 threaten the broader American economy, not to mention the national psyche.

Rising out-of-pocket expenses might be the looming health crisis that no one is talking about, but the lack of media coverage is likely to change over the course of 2026 as horror stories trickle in from those who gambled on not getting sick over the next 12 months – and lost that wager.

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There’s a good chance your health insurance premiums are going up next year, regardless of where you get coverage.

Why it matters: 

The spike in what millions of Affordable Care Act plan enrollees pay will be acute, but workplace insurance is getting more expensive, too — and all at a time when affordability is prominently on Americans’ minds.

ACA premiums have dominated the political discourse in Congress for weeks, but there’s no real sign that any relief is coming from Washington.

• Even extending the Biden-era enhanced ACA subsidies — which most Republicans don’t want to do — would do nothing to address what’s driving the surging cost of care or employer insurance affordability issues.
• And all signs point to Democrats hammering Republicans for high costs in all forms of health insurance leading up to next year’s midterm elections.

The big picture: 

Health insurance gets more expensive almost every year, keeping up with increases in the costs of procedures, tests, drugs and more. But some years see bigger jumps than others, and 2026 is looking like one of those years.

• That means tough choices for families, employers and workers all faced with shouldering higher premiums or out-of-pocket spending. Some will conclude it’s prohibitively expensive and go uninsured.
• Another thing that’s different about this year is that the white-hot political rancor around ACA premiums is putting health insurance back centerstage politically.

By the numbers: 

ACA insurers themselves are raising premiums by an estimated 26%, in part due to rising hospital costs, higher demand for pricey GLP-1 drugs like Ozempic, and the threat of tariffs.

• But add in the loss of federal subsidies, and the increase is 114% — or more than double what they currently pay, according to KFF. 22 million out of 24 million marketplace enrollees now receive subsidies.
• Premiums in the small group employer market will go up by a median of 11%, also per KFF, due to some of the same reasons insurers cite in ACA markets.

For employer health insurance, there’s no comprehensive data yet for 2026, but estimates from earlier this year put the increases in the high single digits.

• For example, according to Mercer, health benefit costs are expected to increase 6.5% per employee in 2026, and many employers are planning to limit premium increases by raising out-of-pocket costs for employees.
• One factor driving these increases is advances in medicines, like new cancer treatments, that are more expensive, according to Mercer.
• But people are also using health care more, per Mercer. That’s possibly because they missed or delayed care during the pandemic — but also because the use of AI in doctors’ offices gives them more capacity and allows them to work faster.

Between the lines: 

Just this month, Gallup polling found that approval of the ACA has hit an all-time high of 57%, including more than 6 in 10 independents but only 15% of Republicans.

• Another recent Gallup poll found that 29% of Americans say that cost is the “most urgent health problem” facing the country, up from 23% a year ago.

The bottom line: 

Get ready to hear a lot more about health care costs over the next year — while potentially also experiencing your own premium increase.