Why health insurance premiums are rising, according to experts
Annual premiums for employer-provided healthcare coverage are expected to rise sharply next year, with workers shouldering more of the costs.
Health insurance premiums for employer-provided coverage are projected to increase by 9.5% in 2027, according to analysts, though costs may not reach those estimates. Currently, the average cost of a family healthcare plan is $28,303, marking a 5% rise from 2025. Workers are contributing an average of $7,470 annually, a 9% increase from the previous year. Matthew Rae, associate director of KFF's healthcare marketplace program, notes that many with job-based coverage face affordability challenges.
Meredith Rosenthal, a professor of health economics and policy at Harvard T.H. Chan School of Public Health, explains that Americans pay high prices for healthcare compared to other developed nations, both in relative terms and in comparison to costs in other countries. Despite inflation, wages, and healthcare premiums all rising at similar rates over the past five years, workers still cover about a quarter of premiums for employer-provided family health insurance.
Forty-four percent of large firms offering health benefits increased employee contributions as insurance costs rose.
There are three primary reasons behind the rising cost of healthcare for the 157 million Americans insured through their jobs, according to experts. Fifteen years ago, family coverage premiums were $15,220 on average, with workers paying $4,190. Causes can be attributed to long-term and recent factors, with insurer markups largely ruled out.
In 2011, insurers had an average markup of 19%, which decreased to nearly 15% by 2024. Instead, health spending accounts for 91% of the growth in average premiums between 2011 and 2024, as healthcare providers set their own prices with limited regulation.
Competition in the market is the primary mechanism for controlling prices, yet it generally fails to work well. Medicare's ability to negotiate costs results in private market MRI prices being about double what Medicare pays. Hospital and physician practice consolidation has occurred over the years, but antitrust regulation is lacking, leading to increased prices, particularly when merging companies were previously competitors. Fundamentally, controlling healthcare spending is essential to reducing premiums.
Written by urgent.news from PBS NewsHour Health's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
