Rising premiums for Americans with health insurance through their employers are set to become a major political challenge, potentially more pressing than the increasing costs faced by those enrolled in the Affordable Care Act (Obamacare). While Republicans in Congress focus on mitigating the anticipated 26% rise in ACA premiums, many are overlooking the looming affordability crisis for the 165 million workers who receive insurance through their employers. These workers are expected to face premium hikes of up to 7% in the coming year.
Katherine Hempstead, Senior Policy Adviser at the Robert Wood Johnson Foundation, warned, “That’s going to absolutely put pressure on whoever’s in power.” With voters increasingly concerned about the affordability of basic necessities, including health care, this issue is set to be a key factor in the 2026 midterm elections. As the GOP works to address the ACA, they may need to focus more on the broader issue of employer-sponsored insurance to maintain control of the House and Senate.
Escalating Employer Costs
In the coming months, workers with employer-provided insurance are expected to see premiums rise by an average of 6 to 7%, coinciding with the largest increase in health care costs in 15 years for employers — a 6.7% rise in 2026. This increase, well above inflation and the typical wage rise, reflects the surge in medical costs, particularly for hospitals and prescription drugs, which have been partly driven by the growing popularity of GLP-1 weight-loss medications.
The consolidation of healthcare providers, reducing competition and increasing bargaining power for health systems, is another contributing factor, policy experts say. Moreover, tariffs imposed by the Trump administration on medical devices and pharmaceuticals could drive up costs for providers, forcing them to pass these on to commercial plans, including employer-sponsored coverage.
Workers Feeling the Pinch
Beyond rising premiums, workers are also expected to face higher deductibles, co-pays, and out-of-pocket maximums, leading to higher overall healthcare costs. Mercer’s 2025 National Survey of Employer-Sponsored Health Plans projects a continued upward trend in premiums, with family coverage premiums already reaching nearly $27,000 in 2024. Workers contribute, on average, $6,850 towards the cost of this coverage.
Despite a planned average 3.1% wage increase in 2026, many employees will find a significant portion of their pay increases absorbed by rising health insurance premiums, leaving little for other expenses. Shawn Gremminger, President of the National Alliance of Healthcare Purchaser Coalitions, commented, “Our wages aren’t going up fast enough to keep up with inflation. A huge part of that is because employers are spending so much more on health care.”
GOP Focused on ACA, but Employer Plans Need Attention
While bipartisan lawmakers are working to find ways to address the affordability crisis, much of the current focus is on the ACA marketplace. However, as Gremminger pointed out, “Lawmakers are missing the broader point.” He believes that average Americans will notice the premium increases in employer-sponsored plans next year and will question why Congress is focusing on the ACA while ignoring the struggles of workers with employer-provided insurance.
Employer groups are urging Congress to consider broader cost-cutting reforms, including greater price transparency and action on healthcare consolidation. However, there has been little indication that either party is prioritising this issue.
Republicans have proposed allowing ACA enrollees to use Health Savings Accounts (HSAs) to offset premiums instead of continuing with federal subsidies. In contrast, Democrats are pushing for an extension of ACA subsidies, particularly as expiring enhancements threaten to leave many Americans without affordable coverage.
The Broader Impact
If costs continue to rise, employees may be forced to choose cheaper, lower-quality plans with higher deductibles, or forgo coverage altogether. Experts predict that this trend will not only affect employer health plans but also the ACA market if subsidies expire.
Elizabeth Mitchell, President and CEO of the Purchaser Business Group on Health, warned, “If a hospital loses Medicaid or public coverage, they always seek to recoup those costs by passing them on to private coverage.” This scenario could lead to fewer insured individuals and more uncompensated care, creating a vicious cycle of rising healthcare costs.
In the lead-up to the midterm elections, health care affordability — particularly for those with employer-sponsored insurance — will likely become a central issue. Both parties will need to address the growing costs of health insurance to avoid further political fallout and to ensure that millions of Americans do not fall through the cracks.