Washington health insurance premiums to soar in 2026 amid rising costs and expiring tax credits

Sep. 10—Health insurance premiums are set to increase across the board next year in Washington.

Both plans purchased on the Affordable Care Act exchange and employer-provided insurance will become more expensive, Washington Insurance Commissioner Patty Kuderer said at a Spokane town hall Wednesday.

Those using the exchange will see an average 21% insurance rate hike in 2026, according to the state's Office of the Insurance Commissioner. Surveys estimate an increase in premiums of between 6.5% and 10% for employer-sponsored plans that do use the exchange.

Kuderer said those who get insurance from the exchange are "some of the most vulnerable populations" in Washington.

"Lower-income families are going to find these increases hard to pay, and the fear is that they are going to drip out of the healthcare system," she said.

If they do, the remaining pool of people who most need health coverage will be sicker and use their health insurance more — increasing premiums for everyone, she said.

Since 2011, Washington residents have been able to purchase health insurance through the Health Benefit Exchange if insurance not provided by employers. In 2024, nearly 300,000 purchased individual health plans from the exchange, including 20,000 in Eastern Washington. Those who purchase insurance on the exchange typically are self-employed, early retirees or do not receive insurance from their employer.

While the majority of people do not purchase insurance on the exchange, premiums for employer-backed insurance are also likely to increase next year.

According to Mercer's national survey of Employer-sponsored health plans, premiums are expected to rise 6.5% — the greatest increase for employer-backed plans in 15 years.

Premiums for these plans have increased by approximately 3% for the past four years, according to Mercer. The national consulting firm found these rising costs are caused by increasing drug prices and a greater number of health-related services overall.

Other national surveys have found similar results for the upcoming year. Companies surveyed by the Business Group on Health estimated a 7.6% increased in premiums. An International Foundation of Employee Benefit Plans survey projected an average increase of 10%.

The 21% increase to the exchange insurance rate is set by the state's insurance commissioner based on how costs have changed.

Insurance rates are the standard cost insurance companies charge for the risk of a possible claim. Insurers then charge customers a premium that is based on the insurance rate and their individual circumstances . As rates increase, so will monthly premiums.

For the past five years, the rate has steadily increased, going from a 4.2% increase in 2022 to 10.7% in 2025.

The projected 21% increase for 2026 would nearly double the increase from the previous year. The hike is largely based on rising health care and prescription drug costs, Kuderer said.

"Costs are going up because of the increased cost of health care overall, and that's due to the increased utilization of health care. It's due to consolidation of health care," she said.

Another factor causing the spike is the end of premium tax credits that have reduced monthly insurance premiums since the COVID-19 pandemic. These credits decreased annual premium costs by $1,330 each year. According to the Exchange, 80,000 Washington residents are expected to end their insurance coverage if the tax credits are not renewed.

"Not knowing what's going to happen, when it's going to happen, how fast it's going to happen is having an impact on these increases as well. And the insurers have built that uncertainty into their request for this rate increase. Unless Congress acts by the end of the year, we're going to see some pain here in Washington state," Kuderer said.

If the premium tax credits are renewed, the Office of the Insurance Commissioner estimates the 21% rate hike would be 4-6% lower.

According to an analysis from Kaiser Family Foundation, individual premiums could increase by as much as 75% for the average person using exchange insurance after the tax credits expire.

"But these two increases are intrinsically tied, because the increase in monthly premium payments, after subsidy, by over 75%, will cause lower cost enrollees to be priced out of individual market coverage. This leaves a relatively 'sicker' and higher cost group of enrollees for insurers to cover, which will drive premiums higher than they otherwise would increase," said KFF policy analyst Matthew McGough.

At the town hall in Spokane, Rep. Timm Ormsby said it will be very challenging for the state to "backfill" the loss of those federal tax credits.

Washington senator Maria Cantwell called on the Republican-controlled Congress to extend the tax credits into next year.

"Many Washingtonians found out today that they will be forced to pay an average of $129 per month or $1,548 per year more next year for the same health care coverage they are already getting. These price spikes are driven largely by Congressional Republicans choosing to not extend the Affordable Care Act enhanced premium tax credits in their Big Beautiful Bill," she said in a statement.

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