Rising ACA Exchange Premiums: Implications and Need for Reform

Health insurers participating in the Affordable Care Act (ACA) exchanges must disclose their upcoming premium adjustments well before the new year. This disclosure allows federal authorities to evaluate their appropriateness. According to a recent Kaiser Family Foundation report, these premiums are anticipated to rise by 14 percent in 2027 compared to 2026. Insurers attribute these hikes to factors such as the termination of expanded subsidies, evolving risk pools, and rising costs.

Despite the end of expanded financial aid, ACA enrollment figures are significantly higher than pre-pandemic levels. Enrollment for 2026 is notably double that of 2020, highlighting sustained interest in exchange participation. This growth in enrollee numbers illustrates the continued demand for ACA coverage even as incentives change.

The No Surprises Act has introduced a new layer of complexity with its arbitration requirement for resolving disputes between out-of-network providers and payers. In 2025, 2.5 million disputes were filed, far exceeding initial projections. Providers have succeeded in more than 85 percent of these cases, often securing payments higher than those negotiated with in-network providers, thus impacting industry costs.

Another factor influencing premium increases is the growing expenditure on GLP-1 drugs. While these drugs are debated for their long-term cost-saving potential in managing obesity-related conditions, current data does not yet confirm such savings. The changes in risk pool composition, notably a decline in younger enrollees aged 18-34, have additionally contributed to rising average care costs.

Despite predictions of a mass exodus from the exchanges due to the expiration of expanded subsidies, actual disenrollment rates remain lower than anticipated. Analysts note that while recent years have seen a deceleration in healthcare spending growth, rising healthcare premiums may lead to increased future spending. The Centers for Medicare & Medicaid Services (CMS) projects healthcare spending will account for 20.6 percent of GDP by 2034.

The persistent rise in ACA exchange premiums highlights the need for substantial reform within the framework. Key recommendations include revising mandatory benefit requirements and diversifying plan options. While some reforms have been proposed, comprehensive legislative action from Congress is essential to provide enrollees with more choices and potentially curb future cost increases.