A sharp rise in health care costs is set to hit millions of Americans who get coverage through their jobs, creating a political challenge that could overshadow the fight over Affordable Care Act (ACA) premiums.
Republicans in Congress are focused on addressing an expected 26 percent increase in premiums for people who buy insurance on the ACA marketplace. They want to do so without expanding government subsidies. But that group is small compared to the 165 million Americans who get employer-sponsored insurance. Their premiums are expected to climb by as much as 7 percent.
Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, said these increases will create political pressure for whichever party is in power.
Voters have been clear that the cost of basic needs — especially health care — will shape the outcome of next year’s midterm elections. To stay competitive, Republicans may need to focus on affordability beyond the ACA. Democrats, meanwhile, say they plan to make health care costs central to their campaigns, though it is unclear if employer plans will receive attention.
Medical Costs Passed to Workers
People with employer coverage will see average premium increases of 6 to 7 percent as they renew coverage for January. Employers expect the biggest jump in medical expenses in 15 years in 2026 — a rise of 6.7 percent. This far outpaces inflation and typical wage increases.
Health insurance through work is becoming more expensive because hospital and drug costs continue to surge. Spending on prescription drugs rose 9.4 percent in 2025 among large employers, driven in part by the growing use of GLP-1 weight-loss medications.
Experts say consolidation in the health care industry also pushes prices higher by reducing competition. New costs may also come from tariffs on certain drugs and medical devices, raising expenses for providers. At the same time, fewer Americans are expected to remain insured, putting pressure on hospitals to shift more costs to commercial insurance plans.
Elizabeth Mitchell, CEO of the Purchaser Business Group on Health, said that when hospitals lose revenue from Medicaid or other public programs, they often try to recover those losses through private insurance.
Congress Narrowly Focused on ACA Costs
Higher premiums also affect the 24 million people in ACA plans and the 69 million enrolled in Medicare. ACA premiums face extra pressure as expanded subsidies from 2021 approach expiration.
For workers with employer coverage, the outlook is even tougher. Beyond rising premiums, they will face higher deductibles, co-pays, and out-of-pocket maximums next year, according to Mercer’s 2025 National Survey of Employer-Sponsored Health Plans.
Premiums in the employer market rose 6 percent this year, pushing the cost of family coverage to nearly $27,000. Workers contributed an average of $6,850, with employers covering the rest.
But wages are not keeping up. Employers plan to raise wages only 3.1 percent in 2026, meaning much of those raises will be eaten up by health insurance costs.
Shawn Gremminger, CEO of the National Alliance of Healthcare Purchaser Coalitions, said rising health care spending is one reason workers feel like their paychecks are not stretching as far as they used to.
While both parties say they want to lower health care costs, congressional debates center almost entirely on ACA subsidies. Gremminger said lawmakers are “missing the broader point.”
Most Americans will not follow the details of health policy. But they will notice when their own costs rise — and they may question why Congress claims to have solved a problem that still affects them.
Employer groups are urging Congress to consider reforms to reduce costs, including stronger price transparency rules and limits on health care consolidation. So far, these concerns are receiving little attention.
Policy Proposals and Political Stakes
Republicans recently proposed giving ACA enrollees greater access to health savings accounts (HSAs) instead of increased subsidies. Democrats continue to support extending the larger ACA subsidies.
A House-passed GOP bill earlier this year included provisions that would have strengthened HSAs for workers with employer coverage, such as doubling contribution limits. The Senate removed these measures, keeping only narrower HSA updates, such as allowing telehealth visits without jeopardizing HSA eligibility and permitting HSA use for direct primary care.
House Ways and Means Chair Jason Smith says he wants to revisit HSA reforms and rising employer plan costs, but has not detailed a plan.
With midterms on the horizon, Republicans may benefit from addressing rising employer insurance costs. Polls show that voters rank health care affordability and the overall cost of living among their top concerns.
If costs keep rising, many workers may switch to cheaper, lower-quality plans with higher deductibles — or drop coverage entirely. Experts expect bsimilar behavior in the ACA market if enhanced subsidies expire.
Hempstead warned that consumers already struggle with food and gas prices. A large jump in premiums could push some to give up coverage altogether. This would leave more people uninsured and increase uncompensated care for hospitals.
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