Inflation has been a frequent topic in the news over the past several years. Rising prices for housing, groceries, utilities, and other everyday expenses have affected households across the country.
Many consumers assume that health insurance premiums increase for the same basic reason. That is partly true, but the relationship between inflation and health insurance premiums is more complicated.
Premiums are influenced by general economic inflation, but they are driven more directly by the expected cost of medical care. For agents who work in the individual health insurance market, understanding that distinction can make renewal and plan comparison conversations more productive.
Health insurance premiums generally rise when insurers expect the cost of medical claims to increase. That includes the prices charged for hospital care, physician services, prescription drugs, diagnostic testing, and other covered services. Utilization also matters. Even if prices remain unchanged, total claims will increase if members use more services or receive a more expensive mix of care.
According to the Centers for Medicare and Medicaid Services, national health spending increased by 7.2 percent in 2024, reaching $5.3 trillion. Hospital spending increased by 8.9 percent, physician and clinical services spending grew by 8.1 percent, and prescription drug spending rose by 7.9 percent.
The 7.2 percent increase should not be interpreted as a medical inflation rate. It reflects a combination of higher prices, increased utilization, enrollment changes, and changes in the types of services people received. All of those factors can influence future health insurance premiums.
Because medical claims account for most premium spending, higher expected health care costs generally require carriers to charge higher rates.
Hospitals, physicians, and other health care organizations face many of the same economic pressures as other businesses.
Labor is a major example. Hospitals must compete for nurses, physicians, technicians, and other medical professionals. When wages and benefit costs rise, the cost of delivering care can rise as well. Medical equipment, technology, facility expenses, pharmaceuticals, and administrative services can also become more expensive.
These broader economic pressures do not always appear in health insurance premiums immediately. Provider contracts and carrier rates are often negotiated in advance, so some effects may not show up until a later plan year. Over time, however, general inflation can contribute to higher medical costs and ultimately to higher premiums.
Individual-market premiums rose sharply for 2026 at the same time the enhanced ACA premium tax credits expired. That created a double whammy for many consumers: higher insurance rates combined with less financial assistance to help pay them.
The underlying ACA premium tax credit did not disappear. However, the enhanced assistance introduced in 2021 ended after 2025. This reduced tax credits for many consumers and eliminated subsidy eligibility for some people whose incomes exceeded the restored income limit.
According to the Peterson-KFF Health System Tracker, insurers initially requested a median premium increase of approximately 18 percent for 2026. Those were proposed increases across insurers and plans, not the final increase experienced by every consumer. Once rates were finalized, benchmark Silver premiums increased by an average of 26 percent nationally.
The expiration of the enhanced tax credits also affected carrier pricing. Insurers anticipated that some healthier consumers would leave the Marketplace when their financial assistance declined. If healthier people are more likely to drop coverage while people with greater medical needs remain enrolled, the expected cost of the risk pool increases.
Meanwhile, the amount consumers actually paid after tax credits increased even more dramatically. KFF found that average monthly premium payments among people who selected Marketplace coverage increased by 58 percent, from $113 in 2025 to $178 in 2026.
Agents should distinguish between the full premium charged by the carrier and the net premium the client pays after any advance premium tax credit.
A client’s monthly payment can change for several reasons:
For off-Marketplace clients who do not receive tax credits, a carrier rate increase generally has a more direct effect on what they pay. For subsidized Marketplace clients, the relationship is more complicated. A client’s premium payment could increase by much more or much less than the carrier’s percentage rate change.
That is why it can be misleading to describe every increase as inflation. Before explaining a renewal increase, agents should identify how much came from the carrier’s rate, how much came from a change in financial assistance, and whether age, income, household information, or plan selection also played a role.
The combination of higher premiums, reduced financial assistance, and higher cost sharing has placed additional pressure on many households.
In a 2026 survey, KFF found that 80 percent of returning Marketplace enrollees said their premiums, deductibles, copayments, or coinsurance were higher than the previous year. Half said their costs were a lot higher, and 73 percent were worried about affording emergency care or hospitalization.
Some consumers responded by moving to lower-premium Bronze plans. That may reduce the monthly premium, but it can also expose the client to a much higher deductible and greater out-of-pocket costs when care is needed.
Agents cannot control medical inflation, carrier pricing, prescription drug costs, or federal subsidy rules. They can, however, help clients understand what changed and evaluate their available options.
That includes recalculating subsidy eligibility, verifying projected household income, checking doctors and prescriptions, comparing provider networks, and reviewing the tradeoff between premiums and out-of-pocket exposure. Agents can also help clients avoid focusing exclusively on the monthly premium when a plan with a low premium may create significantly higher costs when medical care is needed.
In a higher-cost market, that guidance matters. Clients need more than a list of plans and prices. They need someone who can explain why their costs changed, separate the different factors involved, and help them find coverage that balances their health care needs with what they can realistically afford.