Analysis of Rising U.S. Health Insurance Premiums and Insurability Challenges

Since the Affordable Care Act (ACA) was enacted in 2010, U.S. family health insurance premiums have steadily increased, reaching over $25,000 on average in 2024, a near 300% rise since 2000 that outpaces overall inflation. Alongside rising premiums, deductibles, copays, and coverage denials have also escalated, indicating that ACA mandates and the inclusion of cost-free preventive services have not curbed healthcare costs.

The structure of health insurance has shifted away from traditional indemnity-style insurance, which reimburses subscribers for unpredictable catastrophic expenses based on actuarial risk, toward a model that resembles prepayment for healthcare consumption through third-party payers. This shift encompasses coverage for routine and known medical costs, leading to the conclusion that certain healthcare risks are uninsurable by conventional insurance models and require alternative mechanisms such as welfare, charity, or employee benefits.

As a result, sustainable cost reduction remains challenging as the financing model involves spreading expenses across payers for all necessary care, impacting the insurance industry's capacity to manage risk effectively.