By Clara Valenti and Cece Lin · Tuesday, November 10, 2026
Understanding the rising cost of health insurance—and what you can do about it.
You open your health insurance renewal notice, look at the new monthly premium, and wonder if somebody made a mistake.
You haven't changed insurance companies. You haven't suddenly started visiting the doctor every week. You may not have changed anything at all.
Yet your monthly payment is going up.
Again.
Why?
The answer isn't always straightforward. Health insurance premiums are influenced by everything from medical expenses and staffing costs to government policies and the number of people enrolled in a plan.
And here's something you should understand right away: An increase in your monthly insurance payment doesn't necessarily mean your insurance company increased its rates by the same percentage.
Let's look at what actually determines the cost of your coverage.
1. The Cost of Living Affects Healthcare, Too
When people talk about inflation, they usually think about groceries, housing, gasoline, and utility bills.
But hospitals, doctor's offices, laboratories, and pharmacies also have operating expenses.
Think about what it takes to keep a hospital running:
Electricity, water, heating, and air conditioning
Medical equipment and replacement parts
Cleaning products, disinfectants, and protective supplies
Computers, software, and medical records systems
Building maintenance and insurance
Transportation and distribution of medical supplies
When these expenses rise, healthcare providers may need to charge more for their services.
Insurance companies negotiate payments with doctors, hospitals, and other providers. Higher negotiated payments can contribute to higher premiums.
However, general inflation isn't the only reason healthcare costs increase.
2. Medical Care Is Becoming More Expensive
Modern medicine can accomplish things that would have seemed impossible just a few decades ago.
Unfortunately, many advancements come with substantial costs.
Consider:
Medical equipment: MRI machines, surgical robots, imaging equipment, and laboratory technology can be expensive to purchase, maintain, and replace.
Prescription medications: Some specialty drugs, particularly those used for cancer, autoimmune conditions, and rare diseases, can be extremely costly.
Complex treatments: Advanced surgeries and specialized procedures may require expensive equipment, medications, facilities, and highly trained professionals.
Long-term care needs: People with chronic medical conditions may need ongoing appointments, tests, treatments, or medications.
Not every new treatment increases spending. Some improvements help patients recover faster, avoid hospitalizations, or reduce other expenses.
Nevertheless, insurers must estimate how much covered medical care will cost in the coming year. Those estimates help determine premiums.
3. Healthcare Workers Need to Be Paid
A hospital doesn't operate on equipment alone.
It needs nurses, physicians, technicians, pharmacists, therapists, maintenance workers, billing specialists, and many other employees.
Like workers in other industries, healthcare employees face increases in housing costs, transportation expenses, and everyday necessities.
Hospitals and medical practices may also need to increase compensation to attract and retain employees.
Staffing shortages can make this even more expensive, particularly when facilities rely on temporary employees or contract workers.
Those labor expenses can affect the prices providers negotiate with insurance companies.
4. You're Paying Into a Shared Insurance Pool
Here's something many people misunderstand about health insurance.
Your individual premium generally isn't determined by how often you personally visit the doctor.
Insurance works by pooling financial risk.
Imagine 1,000 people enrolled in a health insurance plan.
Some may need little more than routine checkups. Others may require expensive surgeries, ongoing cancer treatment, or hospitalization.
The insurer collects premiums from the group and uses those funds, along with other available resources, to pay covered claims and operating expenses.
If the expected medical expenses of the enrolled population increase, the insurer may need to collect more in premiums.
In Affordable Care Act-compliant individual health insurance plans, insurers generally cannot charge you more simply because you have a preexisting condition, developed an illness, or used more medical services.
They can, however, consider certain permitted factors when determining premiums, such as age, geographic location, tobacco use where applicable, and the plan's coverage level.
In other words, your premium can change even when your personal healthcare needs haven't.
5. Insurance Companies Have Their Own Operating Costs
Insurance companies also have expenses beyond paying medical claims.
These can include:
Customer service and claims processing
Technology and cybersecurity
Regulatory compliance
Administration and staffing
Fraud prevention
Taxes and applicable fees
Financial reserves and business operations
Many insurers also seek to earn profits.
However, insurance companies don't have unlimited freedom to spend premium revenue on administration and profits.
Under the Affordable Care Act's medical loss ratio rules, most insurers must generally spend at least 80% of premium revenue in the individual and small-group markets, or 85% in the large-group market, on medical care and qualifying healthcare quality improvements. Rebates may be required when applicable standards aren't met.
That doesn't guarantee low premiums, but it does place limits on how premium revenue is allocated.
6. Government Subsidies Can Change What You Pay
This is one of the most important distinctions to understand when reviewing your health insurance renewal.
The insurance premium and the amount you personally pay aren't necessarily the same thing.
For eligible people purchasing coverage through the Affordable Care Act Marketplace, premium tax credits can help reduce monthly payments.
The amount of assistance depends on factors such as household income, household size, the cost of benchmark coverage, and eligibility rules.
Enhanced federal premium tax credits that provided additional financial assistance expired at the end of 2025.
The original Affordable Care Act premium tax credit program remains available to eligible households, but some people have received less assistance since the enhanced credits ended. Others no longer qualify under the applicable income rules.
This means your monthly payment can increase for two separate reasons:
The full price of your insurance policy increased.
Your financial assistance decreased.
Both can happen at the same time.
Here's a hypothetical example
2026
2027
Full monthly premium
$600
$660
Monthly tax credit
$400
$300
Your monthly payment
$200
$360
In this example, the insurer raised the premium by 10%.
But the person buying the insurance experienced an 80% increase in their monthly payment.
The additional cost wasn't caused by the insurance company alone.
This is why it's important to examine the complete renewal notice rather than comparing only the amount deducted from your bank account.
Steady Tip: If your payment increased, ask whether the change came from the insurer's full premium, your subsidy, or both.
7. What Else Can Affect Your 2027 Premium?
Several other factors can change your insurance costs.
Your age: ACA Marketplace premiums can increase as you get older, even if your health stays the same.
Your location: Insurance prices can differ by state, county, and geographic rating area. Providers, healthcare prices, and available insurers vary.
Your household income: Changes in your estimated annual income may affect Marketplace financial assistance.
Your household size: Marriage, divorce, and changes in dependents may influence your eligibility for assistance.
Your plan: Even when an insurance company keeps the same plan name, premiums, deductibles, copayments, and provider networks may change from year to year.
Insurer competition: When insurers enter or leave a market, the available plans and their prices can change.
Don't assume your current plan is still your best option simply because it was the right choice last year.
8. What Can You Actually Do About It?
Understanding why premiums rise is useful. Knowing how to respond is even better.
Compare plans instead of automatically renewing
If you purchase coverage through the Marketplace, compare the options available in your area.
Look at more than the monthly payment.
Two plans may have similar premiums but very different deductibles, specialist copayments, prescription coverage, and out-of-pocket maximums.
A cheaper premium doesn't always mean cheaper healthcare.
Consider your total annual expenses
Suppose you're comparing two hypothetical plans:
Plan A
Plan B
Monthly premium
$350
$450
Annual premiums
$4,200
$5,400
Deductible
$7,000
$2,000
Example out-of-pocket maximum
$9,000
$6,000
Plan A costs $1,200 less in annual premiums.
But that doesn't necessarily make it the more affordable choice if you regularly need medical care.
The deductible and out-of-pocket maximum aren't interchangeable, and you shouldn't simply add the deductible to the out-of-pocket maximum. Covered expenses you pay toward the deductible generally count toward that maximum.
For a fuller comparison, estimate how often you'll need appointments, tests, procedures, and prescriptions. Then look at the actual cost-sharing rules for each plan.
Check your doctors and hospitals
Before switching plans, verify whether your preferred providers participate in the exact plan network you're considering.
Don't assume that because a doctor accepts one insurance company's plan, the doctor accepts every plan offered by that company.
Contact the provider and insurer when necessary.
Review prescription coverage
A medication covered under your current plan may have different restrictions or costs under another plan.
Check the plan's formulary, medication tier, pharmacy network, and any prior authorization requirements.
Compare the total expected prescription cost rather than looking only at the monthly premium.
Update your Marketplace information
If you receive premium tax credits, make sure your application reflects an accurate estimate of household income and other relevant information.
Changes can affect your financial assistance. Depending on your circumstances, receiving more advance credit than you're eligible for could result in money owed when you file your federal tax return.
Don't deliberately underestimate your income to obtain a lower monthly payment.
Look at other coverage options
Depending on your situation, you may qualify for employer-sponsored insurance, Medicaid, CHIP, or other coverage.
An eligible household member might have different coverage options from yours.
Compare eligibility, costs, and benefits before making changes.
And be cautious about plans marketed as inexpensive alternatives to comprehensive health insurance. Some products have substantial exclusions or do not offer the same consumer protections as ACA-compliant coverage.
9. Your Health Insurance Renewal Checklist
Before renewing your coverage for 2027, take a few minutes to review the following:
Find your current premium and proposed renewal premium.
Separate the full insurance premium from any tax credit or subsidy.
Check whether your deductible is changing.
Compare copayments and coinsurance.
Review the annual out-of-pocket maximum.
Confirm your preferred doctors and hospitals are in-network.
Verify coverage and costs for your medications.
Update your expected household income if applying for Marketplace assistance.
Compare other plans available in your area.
Check the applicable enrollment deadlines and coverage start date.
Keep copies of your renewal notice, plan comparison, and confirmation documents for your records.
10. Don't Confuse Rising Costs With Having No Options
Healthcare costs are complicated. Premium increases can reflect a combination of medical prices, operating expenses, expected claims, insurer decisions, market competition, and government policies.
You may not be able to control those factors.
But you can control how carefully you review your options.
Don't assume the cheapest monthly premium is automatically the best deal. Don't assume your current insurance will cover everything exactly as it did last year. And don't assume that an increase in your payment came entirely from the insurance company.
Your goal isn't simply to find the lowest premium. It's to find coverage that balances affordability, access to care, and protection against potentially expensive medical bills.
An informed decision won't eliminate every healthcare expense, but it may help you avoid unnecessary surprises.
And that's a worthwhile step toward steady adulting.
Steady Adulting | Health & Money
This article provides general educational information, not individualized insurance, financial, legal, or medical advice. Insurance regulations, subsidy eligibility, and enrollment deadlines can vary. Verify current information with your insurer, employer, state Marketplace, or HealthCare.gov before making coverage decisions.