The cost of Obamacare coverage is expected to rise by a median of 14% in 2027, according to a new analysis. This increase marks the second consecutive year of double-digit premium hikes in the individual market. Insurers attribute the rise to increasing healthcare service costs and the expiration of enhanced Affordable Care Act subsidies, as reported by the KFF analysis of 77 health plans' preliminary rate filings in 16 states and the District of Columbia.
Some enrollees may receive subsidies to help offset the costs, but individuals earning more than 400% of the federal poverty level, approximately $64,000 for a single person, will not qualify. The higher premiums also increase the government's expenses in subsidizing coverage for lower-income individuals.
The rising out-of-pocket costs are leading some healthier enrollees, who are more sensitive to price changes, to drop their coverage. This trend could result in a sicker and more expensive risk pool, contributing to further premium increases. Insurers estimate that the sicker risk pool contributed to a four percentage point increase in premiums this year and expect a similar impact in 2027.
Enrollment in the Affordable Care Act has decreased by about 3 million people year over year, totaling 19.2 million, according to federal data. Emma Wager, a senior policy analyst for KFF's Program on the ACA, noted that the combination of declining enrollment and rising premiums is concerning, although she stated that the market remains relatively stable overall.
Democrats are using the enrollment decline as a campaign issue, attributing the situation to the expiration of subsidies and rising healthcare costs, while the Trump administration attributes the drop to improper enrollments. The analysis also highlights that rising costs of medical care and prescription drugs, including GLP-1 weight loss medications, are significant factors contributing to the premium increases.
Looking ahead, there is speculation about whether Congress will attempt to revive the enhanced subsidies, particularly if Democrats gain control.