Health insurance is getting expensive again.
I realize that's not exactly breaking news.
The American Spectator recently pointed out that consumer health insurance costs have grown at roughly 6% to 9% annually for much of the past 25 years. Meanwhile, ACA Marketplace insurers are proposing a median 15% premium increase for 2027, according to KFF. That follows a pretty ugly 2026 as well.
Whenever numbers like these come out, Washington usually starts arguing about who should pay the bill.
Maybe we should spend a little more time asking why the bill is so high in the first place.
Insurance Isn't The Same Thing As Healthcare
I think we have mixed these two things together for so long that most Americans don't separate them anymore.
Health insurance finances healthcare. It isn't healthcare.
If hospitals, physicians, prescription drugs and medical procedures keep getting more expensive, eventually that shows up somewhere. Maybe the employer pays more. Maybe the government increases subsidies. Maybe the insurance company raises premiums or deductibles.
The money can move around.
The bill doesn't disappear.
KFF recently looked at what's driving premiums higher and found that underlying healthcare spending, particularly hospital spending, is a major part of the problem.
Insurance companies aren't innocent here. There is plenty about health insurance I would change.
But blaming the insurance company for every premium increase is a little like blaming your Visa card because the restaurant raised the price of dinner.
The card didn't cook the steak.
Is This Really A Free Market?
People sometimes describe America's healthcare system as a free market.
I don't see much of one.
Try calling a hospital and asking what an MRI costs.
Then ask what your insurance company's negotiated price is.
Now call another hospital and compare.
This is how we shop for cars, airline tickets and almost everything else. Healthcare operates in a completely different universe.
The consumer usually isn't negotiating anything. An insurance company negotiates with a hospital system that may own half the hospitals and physician practices in town. Somewhere else a pharmacy benefit manager is negotiating with a drug manufacturer.
Eventually the patient gets an Explanation of Benefits that requires a decoder ring to understand.
Hospital consolidation makes this worse.
KFF found that one or two health systems controlled at least 75% of the inpatient hospital market in 83% of metropolitan areas in 2024. Private insurance prices for hospital care increased about 30% between April 2019 and April 2026, compared with a 21% increase in Medicare payment rates.
If one hospital system controls most of the market, the insurance company doesn't exactly have a great negotiating position.
That's not capitalism working too well.
That's a lack of competition.
Medicare Gives Us Another Example
Medicare handles prices differently.
Traditional Medicare generally pays providers according to government-established rates rather than negotiating prices the way commercial insurers do.
That can restrain prices. It also creates other problems when providers believe reimbursement isn't keeping up with their costs.
Medicare beneficiaries still feel healthcare inflation too. The Part A hospital deductible increased from $1,676 in 2025 to $1,736 in 2026, for example.
Medicare Advantage adds private competition back into the equation.
Carriers compete for beneficiaries by building networks, managing healthcare and designing benefits. I'm not going to pretend that system is perfect either. Prior authorization has been a legitimate problem, and we have seen carriers pull back benefits as they try to get their Medicare Advantage books profitable again.
But I like the basic idea of carriers having to compete for the customer.
If Humana offers a lousy product in a county and UnitedHealthcare offers something better, consumers can move.
Competition gives companies a reason to improve.
I would rather fix the problems that interfere with that competition than conclude that government should simply run more of the healthcare system.
Subsidies Don't Make Healthcare Cheaper
This is one of the points from the American Spectator article that deserves more attention.
A subsidy can make insurance more affordable to the person buying it.
That's not the same thing as making healthcare cheaper.
Suppose something costs $1,000 and the government gives me $800 to buy it.
My cost is now $200.
Great.
The product still costs $1,000.
Somebody paid the other $800.
That's not an argument that we shouldn't help people who legitimately cannot afford health insurance. We should.
But continually increasing subsidies while the underlying product gets more expensive isn't much of a long-term cost-control strategy.
Eventually taxpayers are just chasing healthcare inflation with bigger checks.
Put The Consumer Back Into Healthcare
This is where I would like to see the conversation go.
Insurance has an important purpose.
If I have a heart attack tomorrow and need $150,000 worth of medical care, I want insurance.
What I question is whether we need a third party involved in nearly every routine healthcare transaction.
Give consumers better price transparency and stronger Health Savings Accounts. Make direct primary care easier. Encourage providers to compete for patients instead of protecting consolidated healthcare systems from competition.
Most importantly, let people control more of their own healthcare dollars.
When it's your money, price suddenly matters.
That's how markets work.
And before somebody says healthcare can never work like a normal market, I agree. Nobody having a heart attack is going to shop emergency rooms looking for a coupon.
But most healthcare isn't an emergency.
There is a lot of room between today's system and some imaginary world where people negotiate the price of an ambulance while unconscious.
Insurance Agents Are Seeing This Firsthand
Agents are standing at the end of this enormous healthcare financing system trying to explain the result to the customer.
Small businesses are getting hammered by group health premiums. ACA customers are seeing significant increases. Medicare beneficiaries are watching Medicare premiums, Part D costs and Medigap rates move higher.
We've been discussing some of these same issues on InsuranceTalk because agents are often the first people consumers ask when their insurance suddenly gets more expensive.
And the question is almost always:
"Why did my insurance go up again?"
We need a better answer than "inflation."
Maybe We Should Try More Competition
America doesn't really have a free healthcare market.
We have government programs mixed with employer-sponsored insurance, tax preferences, mandates, hospital consolidation, PBMs, subsidies and thousands of pages of regulation.
I'm not suggesting we tear the whole thing apart tomorrow.
But direction matters.
I would rather move toward a system where consumers have more control over their healthcare dollars and providers have to compete harder to earn them.
Healthcare will always need insurance. There will probably always be some government involvement too.
But after decades of healthcare costs climbing faster than almost everything else, I don't think the answer is simply finding another way for Washington to pay the bill.
Maybe we should try making the bill smaller.