It’s that time of year again: open enrollment. With it comes a lot of questions: Do I go with an HMO or a PPO? Do I need an FSA or an HSA? What’s my deductible again?
It’s very confusing, but one thing is clear: The cost of your health insurance is likely going up. Premiums are growing whether you get your insurance through work, the Affordable Care Act marketplaces, or Medicare.
Of course, medical insurance has been getting more expensive for years, but KFF chief Washington correspondent Julie Rovner told me the problem is now getting worse. “We’ve had bigger inflationary spikes, particularly in the early 2000s, but for the last 15 years or so, health care costs have been rising but not terribly fast,” she said. “They seem to be accelerating again now.”
Why do our premiums keep rising? And what can we do about it? Rovner answers those questions on the latest episode of Explain It to Me, Vox’s weekly call-in podcast. Below is an excerpt of our conversation, edited for length and clarity. You can listen to the full episode on Apple Podcasts, Spotify, or wherever you get podcasts. If you’d like to submit a question, send an email to [email protected] or call 1-800-618-8545.
Why are premiums going up so quickly now?
Well, there’s a bunch of reasons, but they come down to two things: price and utilization. Utilization is how many health care services people use. The more services people use, the more the nation’s health care bill goes up. There are a lot of things that are driving expanded use right now. One of them is the aging of the baby boomers. As we get older, we use more care, and the baby boomers have been turning 65 since 2010.
Another is that, to some extent, we’re still catching up from health care that people didn’t get during the pandemic, when nobody was leaving their houses and when you basically didn’t go to the doctor unless you absolutely had to. We’re still seeing people not only getting care that they didn’t get then, but people who didn’t get care then and should have, who are sicker than they might have been if they’d gotten care in the pandemic.
Then of course there’s just new things that we can do. Everybody knows about the GLP-1 weight-loss drugs that are so popular and so highly used right now. We have a lot more new drugs. Some of these are amazing advances.
More people are getting surgery now because of medical advances. You used to have to consider how long you would be laid up if you had a joint replaced or had some kind of surgery. Now we have much easier surgeries, so it makes it much easier to do these things.
Then there’s the price side, and I can sum it up in one sentence: We have the highest prices in the world because people who provide health care here can set prices that high. The government doesn’t regulate it nearly as much as they do in other countries. Most other countries do have hybrid systems. They do use some private insurance and some government subsidies, but they also have much more serious regulation of prices than the United States has.
It’s really wild because we should be going to the doctor. We should be taking care of ourselves. But it feels like when it comes to the price of medical services and the price of insurance, we get punished for it.
We do. We now spend so much on health care that it’s 18 percent of our national gross domestic product (GDP). Lots of people who would like to earn money are going into health care, so we have people encouraging possibly unneeded health care to make a profit. There’s that piece of it also, in addition to the things that we should do that end up costing us money.
Is there a difference in the rise in costs we’re seeing for those of us who get employer-sponsored insurance versus those of us who get our insurance through the ACA marketplace?
There is. One of the reasons that in 2026 ACA premiums are rising is because expanded subsidies first approved in 2021 had basically doubled enrollment and now they are set to expire. Insurers seeing that those extra premiums were scheduled to end said, “Well, a lot of people are going to no longer be able to afford their health insurance, so we’re going to have to raise premiums on the theory that the sick people are going to hang onto their health insurance and the healthier people are probably going to drop it if they see the prices go up.”
But everyone will be affected if people can no longer afford their coverage and go uninsured because they won’t get medical care until they absolutely have to, and then it’s more expensive. The cost of that care is going to have to get passed along to somebody.
Are employers absorbing some of these higher costs for people who get that employer-sponsored insurance?
It depends. During times when it’s hard to hire people and we have tight labor markets, employers try to absorb as much of the increases in health care spending as they can because they don’t want to load more onto their workers and therefore make it harder to win new workers and retain old workers.
Right now, the labor market is not as strong as it has been and health care costs are going up. So it’s expected that a lot of employers are going to pass along a lot more costs to their workers.
What can consumers do to try to mitigate these costs?
It’s really hard. There are a number of people who think that price transparency is a big help. It’s probably not the answer to everything, but knowing what things cost in advance certainly doesn’t hurt. Being able to shop around for elective services also doesn’t hurt. Sometimes, if you go to a hospital, you can find the same care at an outpatient clinic for much less because of the complicated ways that government and private insurers pay for these things. So sometimes you can save money. Sometimes you can offer to pay cash instead of using your insurance. That’s very true for things like generic drugs.
So there are ways to save some money, but we’re all captives of the mess of a health care system that we have right now.
If insurance just keeps getting more and more expensive, do you think we’ll see more people opt out of it altogether?
Well, that’s a concern, and that’s where we were before the Affordable Care Act passed: We had 14 percent of the population that didn’t have insurance. Now it’s down to an all-time low of about 8 percent.
But we’re definitely going to see people lose their insurance even if they’re not dropping it voluntarily. The bill that Republicans passed this summer takes away eligibility for a lot of people on Medicaid, and out-of-pocket costs are going up dramatically, even if you do have insurance. Deductibles and co-payments and just the cost of medical care in general means that even people with pretty good insurance end up owing lots of money out of pocket. So I think we’re coming to another transition point where this is going to be back on the national agenda.
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