ACA premiums set to surge 14% as tax credits expire

ACA Marketplace premiums could jump 33% over two years

Premiums for ACA Marketplace plans could increase by more than one-third over a two-year period if participating payers get what they want next year, the analysis indicated.

The analysis found that none of the 77 payers providing ACA Marketplace coverage in the select areas requested a decrease in premium prices in 2027. Instead, premium changes ranged from 1% to 52%, with 20 payers seeking a premium increase of more than 20%.

Mostly, the proposed premium changes fell between 10% and 20%, researchers reported.

They added that this analysis measures a payer's premium increase as the enrollment-weighted average rate change across all of its products within a state. That includes all types of metal plans. This means that some plans could face steeper increases than others, which occurred last year when benchmark silver premiums increased 26% on average once finalized, despite an overall proposed 18% increase.

For the most part, payers said healthcare prices and utilization are behind the large premium increases. The analysis showed that the median change in the medical cost trend was 10%, higher than the recent average of 8%.

Growing demand for expensive GLP-1 medications has upped prescription spending for payers, leading to higher premiums. But payers also said the complexity and costliness of individual claims have grown, contributing to the higher medical cost trend.

The trend toward higher-severity claims may be a product of providers using AI for clinical documentation and coding, which can maximize billable services, researchers said. Early research suggests that these AI solutions could increase overall healthcare costs, as payers reimburse providers more for services, resulting in higher premiums for patients.

General economic inflation and higher labor costs resulting from widespread staffing shortages also contributed to 2027 premium proposals, the analysis found.

Enhanced premium tax credit lapse reshapes payer risk pools

Most people have been somewhat shielded from more extreme premium price hikes in recent years. The majority of those signing up for coverage through the ACA Marketplace have had help paying premiums due to tax credits, specifically enhanced tax credits that Congress enacted in 2021 to include people with incomes at or below 400% of the federal poverty line.

However, lawmakers let enhanced premium tax credits lapse at the end of 2025, leaving many enrollees without assistance and payers facing a new risk pool.

This expiration of the enhanced premium tax credits continues to play a major role in shaping 2027 premiums.

The lapse has increased payers' risk pool morbidity, as many healthier enrollees left the ACA Marketplaces last year without premium assistance, researchers explained. This has left payers with a somewhat sicker and more expensive population to cover, they continued.

Payers said in their filings that they are still grappling with this unique market shift and have requested higher premiums to account for the new risk pool and lower enrollment numbers.

Among those adjusting for this change, payers project it will increase premiums by about 4 percentage points, the analysis found.

Payers also identified other federal policy changes that will uniquely affect ACA Marketplace plans as reasons for proposing steep premium increases. Among those changes is the delay of the yearly Notice of Benefit and Payment Parameters and the Marketplace Integrity and Affordability Rule.

CMS did not release the finalized NBPP for 2027 until after some payers had already prepared their premium rate filings for next year. Payers said this created uncertainty in their filings.

Some payers also mentioned that certain provisions of the rule, including the pre-enrollment verification requirement for special enrollment, which was initially finalized in the 2025 Marketplace Integrity and Affordability final rule and recently stayed by a judge.

The final 2027 NBPP also introduced multi-year catastrophic health plans for up to 10 years and broader eligibility requirements.

Additionally, the analysis found that a small group of payers cited provisions of the budget reconciliation legislation -- also known as the One Big Beautiful Bill Act -- as drivers of premium increases. Specifically, these payers expressed concerns about how ongoing shifts in coverage eligibility under Medicaid and the ACA Marketplaces will affect their risk pools in 2027.

Payers are expected to finalize premium changes by late summer. With open enrollment beginning Nov. 1, consumer advocates warn that affordability challenges could drive significant coverage losses in 2027.

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy and health IT since 2016.