Key Drivers of Healthcare Costs: House Committee on Insurance
- Tori MacFarlan
- Jun 4
- 1 min read
The primary driver of the increasing cost of health insurance coverage is the high price of health care, as opposed to high utilization of health care.
A consensus exists that health insurance premiums will grow sharply in 2026. In the ACA Exchange marketplace, the expiration of enhanced subsidies in 2026 will lead to higher out of pocket costs for participants, which may have the additional effect of prompting healthy participants to forgo insurance, thereby resulting in a less healthy risk pool and driving rates up further.
In the commercial insurance market, in 2025, the average employer-sponsored, family health insurance health premium was just shy of $27,000 (including both employer and employee contributions). This figure does not include deductibles, co-payments, or other out-of-pocket expenses for enrollees. The significant increase in employer-sponsored health insurance (ESI) premiums in 2026 is expected to be blunted somewhat by cost-saving measures employers take, such as increasing deductibles or reducing coverage. Estimates of the increase after employer cost reduction measures include 6.5 percent and 8.0 percent; without employers’ cost reduction measures, the projected increase would be approximately 9.0 percent.
The primary driver of the increasing cost of health insurance coverage is the high price of health care, as opposed to high utilization of health care. That has been a longstanding theme in the U.S. healthcare system. The vast majority of national spending on healthcare is routed through health insurance, whether commercial or public insurance. The premiums charged by health insurance companies reflect, along from a profit margin and administrative expenses, the prices that providers charge.
