Introduction to Rising Health Insurance Costs
More than 154 million people with health insurance through an employer face steep price increases, and the situation is likely to get worse, a new report shows. The increases are coming as the federal government shutdown has been spurred by a stalemate over health insurance for another group, the 22 million Americans on Affordable Care Act plans.
Current State of Health Insurance Costs
Premiums for job-based health insurance rose 6% in 2025 to an average of $26,993 a year for family coverage, according to a yearly survey of employers by KFF, a health information nonprofit that includes KFF Health News. It’s the first time in two decades the cost of covering a family of four has risen by 6% or more for three straight years, data from KFF shows. Over the past five years, the average premium for family coverage is up 26%, compared with a 29% increase in workers’ wages and nearly 24% growth in inflation. That means the average cost for family coverage is now about the same as a new Toyota Corolla hybrid.
Impact on Individuals and Families
The average annual premium for an individual health plan provided by employers increased by 5% to $9,325 — nearly $3,000 higher than in 2016, according to the survey. Workers at small companies like Steve Reiff Inc., a sandblasting and painting firm in South Whitley, Indiana, are feeling the pinch. Eric Trump, the company’s controller, said his company’s health insurance costs rose 8% for the 2026 fiscal year — roughly the same as they have in the last few years. Workers at Reiff pay about half the cost of their health coverage. About half of its 20 current employees decline the insurance because they get coverage through a family member or choose to go uninsured, he said.
Employer Response to Rising Costs
Most people with job-based insurance contribute to the cost of their premiums, with the average worker this year contributing $1,440 for individual coverage or $6,850 for family coverage. Over time, more workers have paid increasingly higher deductibles, the amount they must spend out-of-pocket on medical services before their insurer pitches in. More than one-third of covered workers are enrolled in a plan with a deductible of $2,000 or more for an individual. The share of workers with such a plan has increased 32% over the last five years and 77% over the last 10 years, the report said.
Factors Contributing to Rising Health Insurance Costs
Rising drug and hospital costs are often cited as major culprits for rising health insurance costs, and neither shows signs of ebbing. One big concern among employers is the high price of GLP-1 drugs for weight loss, which a growing number of companies cover. Their high prices, combined with strong demand, have led some workplaces to tighten or eliminate coverage for weight loss. “Large employers know these new high-priced weight-loss drugs are an important benefit for their workers, but their costs often exceed their expectations,” study author Gary Claxton, a KFF senior vice president, said in a press release.
Government Response and Implications
Employers typically respond to higher health costs by shifting costs to their workers, but it’s unclear how much more financial pain workers can take. The survey found nearly half of large employers said their employees have “moderate” or “high” concerns about their level of cost sharing. While the rising cost of employer-sponsored insurance has outpaced general inflation, the issue received scant attention in recent months on Capitol Hill. To help pay for extending tax cuts, Trump’s tax and spending law reduces by billions of dollars the amount the government spends on Medicaid, the state-federal health insurance program for 70 million low-income and disabled people.
Conclusion
The rising cost of health insurance through employers is a significant concern for millions of Americans. With premiums increasing by 6% in 2025 and the average cost of family coverage reaching $26,993, it is essential for employers, employees, and the government to work together to find solutions to this growing problem. The impact of rising health insurance costs on individuals, families, and employers cannot be ignored, and it is crucial to address the underlying factors contributing to these increases, such as rising drug and hospital costs.
FAQs
- How much did premiums for job-based health insurance rise in 2025?
Premiums for job-based health insurance rose 6% in 2025 to an average of $26,993 a year for family coverage. - What is the average annual premium for an individual health plan provided by employers?
The average annual premium for an individual health plan provided by employers increased by 5% to $9,325. - How many workers are enrolled in a plan with a deductible of $2,000 or more for an individual?
More than one-third of covered workers are enrolled in a plan with a deductible of $2,000 or more for an individual. - What is the main factor contributing to the rising cost of health insurance?
Rising drug and hospital costs are often cited as major culprits for rising health insurance costs. - How many people are affected by the rising cost of employer-sponsored insurance?
More than 154 million people with health insurance through an employer face steep price increases.
