Texas Health Insurance Premium Surge: Challenges Ahead for 2026

Texas is confronting significant challenges in the health insurance sector, with the state anticipating one of the largest premium rate increases in the nation for 2026. Following the expiration of enhanced federal subsidies available since 2021, the average premium in Texas is expected to surge by nearly 35%. Texans have already begun to feel the impact, with net premium costs rising from approximately $57 per month in 2025 to about $89 in 2026.

Despite Texas being ranked 22nd for health insurance cost burden, where an average premium consumes 9.95% of a household’s income, persistent issues remain. In places like Kerr County, about 17.3% of residents lack health insurance coverage, a figure significantly higher than both state and national averages. Alarmingly, one in four adults in their working years in Texas remains uninsured.

The Medicaid coverage gap in Texas significantly exacerbates these challenges, affecting around 1.5 million adults. These individuals earn too much to qualify for traditional Medicaid assistance yet fall short of the income requirements for marketplace subsidies. This discrepancy accounts for approximately 40% of the national coverage-gap population.

Insurers in Texas, along with those in 15 other states and Washington D.C., have begun filing preliminary rate requests for 2027, suggesting another potential year of double-digit premium increases. A study by the Peterson Center on Healthcare and KFF indicates ACA marketplace insurers are proposing a median premium raise of 14% for 2027. Key drivers include rising healthcare costs, prescription drug expenses, and recent federal regulatory changes.

The lapse in enhanced premium tax credits at the end of 2025 has heightened costs for those earning beyond the subsidy threshold, particularly affecting individuals earning 400% or more of the federal poverty level. This shift has led healthier, subsidy-ineligible enrollees to exit coverage, leaving a smaller, less healthy insurance pool.

As the market braces for another year of premium escalations, middle-income households face intensified challenges, finding themselves increasingly priced out of insurance coverage. This trend highlights the ongoing complexities within the health insurance landscape, both in Texas and nationwide.