The Downstream Effects of Rising Health Insurance Costs

The cost of health insurance in 2026 has risen significantly for many Americans, whether they have coverage through their employers, Affordable Care Act (ACA) plans, Medicare, or Medicaid.

Following a decades-long trend of rising health insurance costs, this latest increase is due, in part, to the expiration of federal subsidies that helped millions of people afford their ACA plans, and to Medicaid funding cuts signed into law in July 2025.

In a January 22 media briefing, Gerard Anderson, PhD, a professor in Health Policy and Management, and Elizabeth Fowler, PhD ’96, a distinguished scholar in Health Policy and Management, discussed the future of health insurance in the U.S., including advice for people who are uninsured or worried about their ability to afford health care.

Health insurance premiums rise as health spending rises

Between 2022 and 2023, health care spending in the U.S. increased by 7.5%. Between 2023 and 2024, spending rose another 7.2%, amounting to over $15,000 per person, according to the Centers for Medicare and Medicaid Services.

Health insurance, whether through a private insurer or a government program, covers a large share of that spending—74% in 2024—and premiums rise accordingly. When premium costs increase, insurance providers anticipate that some people will drop coverage; they account for this in setting premium rates for the enrollees who remain. So, when health care spending rises by 7%–8% in a year, “it’s not surprising that the rates will go up by 10% or 11%,” Anderson says.

Younger adults who are generally healthy are more likely to drop coverage, says Anderson. This leaves sicker individuals—people who need to keep their insurance to cover things like prescriptions, cancer treatment, and chronic conditions—to shoulder the burden of higher premiums.

The downstream effects of unaffordable health insurance

When health insurance premiums are unaffordable, people are more likely to go without insurance or opt for a plan that offers a lower premium but a much higher deductible (the amount a person must pay out of pocket before their insurance will contribute). Those individuals are more likely to skip important preventive care.

“We know from many studies over many years that getting your preventive services is critically important,” Anderson says. Without consistent preventive care, it’s less likely that cancers or other conditions will be caught early, when treatment is easier and often more successful. Instead, years later, “what we see is a certain medical condition cropping up that could have been treated earlier,” he says—and health issues are typically more expensive to treat once they have progressed.

Preventive care as a national priority

The U.S. spends about 18%–19% of its gross domestic product on health care, much more than other industrialized nations spend, Anderson says. “They spend closer to 9%–10%, which means that they can spend money on other things—education, housing, national defense, whatever their priorities are,” he explains.

Yet only 2%–3% of U.S. health care spending goes to prevention. “Other industrialized countries spend a much higher percentage of their health care dollar on prevention, and their life expectancy is longer,” Anderson says. Without a greater emphasis on prevention and primary care, the U.S. is likely to see life expectancy continue to decline, he adds.

The high costs of low health care access

In any given year, about 20% of people in the U.S. will experience a major illness or medical expenditure, Anderson says. “That would be something more than $5,000, typically; $20,000 if you ended up going to the hospital, or more,” he says. That debt can impact a household's finances and well-being for years, leading people to skip or delay care, experience worse health outcomes, and cut spending on food or other household needs, according to an analysis by KFF.

Medical debt is one of the leading causes of personal bankruptcy in the U.S. “An estimated 60%–65% of personal bankruptcies are tied to unpaid medical bills, and it’s also a cause for reduced credit ratings,” Fowler says. People with medical debt are five times more likely to forgo mental health care than people without medical debt.

Health spending accounts aren’t a replacement for insurance coverage

A recent White House proposal for addressing health care affordability includes establishing government-supported health spending accounts (HSAs) for eligible Americans. Individuals would use those funds to purchase a health care plan of their choosing, the proposal suggests. It’s unclear if or how exactly such a strategy would work, Fowler says.

“Giving people money through a health savings account, a health reimbursement account, or a flexible spending account (FSA) is really not the same as providing health coverage,” she explains. Such an approach might be helpful for people who have higher incomes and are relatively healthy, she adds, but it likely would not meet the needs of people already struggling to afford health care.

“For patients undergoing treatment for cancer ... or a patient anticipating surgery, or a child with special health needs, or a patient with a chronic health condition, $1,000 or even $5,000 in a contribution to a tax-preferred savings account ... will not come close to covering the cost of care,” Fowler says. “One trip to the emergency room could exceed the amount provided.”

What to know if you are concerned about affording health care

For individuals who did not select a health care plan during the open enrollment period or are uninsured for other reasons, Anderson and Fowler offer the following recommendations:

• Take advantage of community health clinics and federally qualified health centers, which are tailored to people who need affordable care.
• Determine whether you qualify for Medicaid or CHIP (Children's Health Insurance Program) in your state.
• Ask local hospitals and health systems about their charity care obligations and financial assistance programs.
• For help affording prescription medications, talk to your provider or pharmacist about patient assistance programs (also called medication assistance programs or MAPs), which may cover some or all of the cost of a medication.
• Check whether your state provides services to address gaps in health insurance coverage.

Numerous life changes can also qualify you for a special enrollment period, giving you an opportunity to enroll in or change your health care plan. “For example, if you move to a new area, if you get married, have a baby, or have a change in employment status that means you lose your employer coverage,” Fowler explains.

Importantly, know that you can still receive emergency care if you need it. The federal law known as EMTALA (Emergency Medical Treatment & Labor Act) ensures that you will be treated or stabilized at an emergency department, regardless of your insurance or ability to pay. “It doesn’t guarantee that it will be free, but it does guarantee that you will get care,” Anderson says. “So when you have an emergency situation ... go to the hospital and get the care that you need.”