What’s behind ACA premium increases for 2026?

A shifting health care and policy landscape is one factor leading to double-digit premium increases in the Affordable Care Act and small-group markets for 2026.

The American Academy of Actuaries released an issue brief on ACA premium rate drivers.

The expiration of enhanced premium tax credits at the end of 2025 and the increased availability of plans that are not ACA-compliant could destabilize the market by increasing adverse selection and raising premiums, said Academy Senior Health Fellow Cori Uccello. In addition, “policy changes affecting one insurance source such as ACA plans often ripple across the system, which includes other sources such as Medicaid and employer coverage—shifting enrollment patterns, altering risk pools, affecting premiums, and influencing the number of uninsured,” Uccello said.

The issue brief notes that the individual and small group ACA-market risk pools are likely to deteriorate in 2026, leading to higher rates for some plans. A deteriorating risk pool means that the risks within an insured population are increasing, and likely will be more costly to insure. As costs and premiums increase, healthier individuals may seek health insurance elsewhere.

Insurers are proposing the highest premium increases in five years, with a median premium hike of 15%, according to an analysis for the Peterson-KFF Health System Tracker covering 19 states and the District of Columbia.

Inflation, increased spending to blame for premium increases

Key medical trend factors influencing premiums in 2026 include: inflation, increased prescription drug spending, and increased demand for behavioral health services, the Academy said.

Although overall inflation has fallen from the early 2020s, it still remains above prepandemic levels. Spending on prescription drugs is expected to be higher, due to higher unit price growth; launches of new expensive gene, cell and biologic therapies, and the increased demand for expensive weight-loss drugs in plans that cover them. In addition, postpandemic demand for behavioral health services remains high.

The risk pool expected to become murkier

Proposed premiums reflect the composition of the risk pool, which is expected to worsen in 2026. In the individual market, key drivers include the federal market integrity rule and the expiration of enhanced premium tax credits. In the small group market, continued shifts to level-funded and self-funded coverage are major factors impacting premiums. Premium changes also will reflect local market dynamics as well as state legislative and regulatory requirements.

Medicaid redetermination also will have an impact on the risk pool. While Medicaid redeterminations are largely complete, 2026 will be the first year in which the experience of redetermined individuals is fully reflected in the individual market risk pool.

In some states, members of this cohort have been younger and healthier, improving the risk profile and placing modest downward pressure on rates. In other states, this cohort appears to have higher health needs, resulting in upward pressure on rates. However, a significant share of enrollees who shifted from Medicaid may be currently enrolled in $0-premium plans made possible by enhanced premium tax credits. With those subsidies set to expire, these enrollees may face substantial net premium increases.

Higher-than usual uncertainty

Many 2026 rate filings were submitted before key federal policies were finalized, requiring insurers to price coverage amid higher-than-usual uncertainty. This lack of clarity around enrollment, usage and cost impacts may have led to higher risk margins among some insurers.

While enrollment in the ACA-compliant individual market has grown, the small group market in most states has continued to experience a slow but steady decline, the Academy said. As healthier employees leave the market, average costs increase, prompting further disenrollment and creating a feedback loop that can drive up premiums. This dynamic can be accelerated when small employers have access to alternative coverage options outside the ACA-compliant small group pool.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].