Insurers confront politics, policy in tricky rate season

Modern Healthcare – Wednesday, July 2, 2025
By Nona Tepper

As the GOP-led Congress and President Donald Trump put their stamp on the health insurance market, insurers are forced to prepare for four scenarios in 2026 — some of which will mean big premium hikes.

This uncertainty stems from two major policy issues in the health insurance exchanges.

Enhanced premium tax credits are set to expire at the end of the year unless Congress and Trump extend them. Republicans also seek to restore the cost-sharing payments to marketplace carriers, which Trump rescinded in 2017, and put an end to “Silver loading” marketplace premium increases.

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It means that health insurance companies and state regulators must project expenses, membership levels and premiums for next year under circumstances in which both of those policies take effect, only one or the other does, or neither does.

Allowing the more generous premium subsidies in place since 2021 to lapse is expected to cause millions of consumers to abandon their plans over affordability concerns and, in turn, worsen the risk pools on the exchanges.

And while the sector fought Trump’s maneuver halting cost-sharing reduction payments, insurers and state regulators swiftly conceived of Silver loading. That enabled them to focus rate hikes on the benchmark Silver plans used to calculate premium tax credits, which led to bigger subsidies. Scrapping Silver loading is projected to raise costs for some consumers because it would make the tax credits smaller.

While cost-sharing payments provisions did not survive the version of the One Big Beautiful Bill Act of 2025 that the Senate passed Tuesday, the proposal could return in another form.
‘Sticker shock’

Insurance companies are preparing for a sicker, more costly membership in 2026, Jeanette Thornton, executive vice president of policy and strategy at AHIP, said during the health insurance trade group’s conference in June.

“People are going to have some sticker shock when it comes to their premium,” Thornton said.

Calculating rate adjustments is complicated under ideal conditions, but insurers are preparing for next year without knowing what the law will be or how the market will react.

“Going into 2026, I would argue that this is probably the most level of uncertainty that we’ve experienced since the exchanges launched,” said Wes Sanders, founder of Evensun Consulting, which advises insurers.

Insurers are asking state agencies to approve substantial premium increases to compensate for higher expenses and lower revenue.

In Tennessee, for example, UnitedHealth Group subsidiary UnitedHealthcare assumes morbidity would worsen if the premium subsidies shrink and Silver loading ends. The company asked the state to OK a 46.2% rate increase. The insurer seeks a 28.4% rate hike if the subsidies are renewed and Silver loading is left in place.

Sanford Health Plan likewise submitted two bids for next year to state regulators, President and CEO Dr. Tommy Ibrahim said.

“It has been a tremendous lift in a very stressful time for our team,” Ibrahim said. “It’s also an added cost at a time when everybody is interested in affordability.” Sanford is preparing to lose exchange enrollment next year, he said.

Highmark Health expects to gain exchange members as rivals exit its markets in response to the uncertainty, President and CEO David Holmberg said. The company has a large geographic overlap with CVS Health subsidiary Aetna, for example, which will exit the exchanges in 2026.

“The marketplace doesn’t like uncertainty. We’re seeing that with some of the national, for-profit players leaving markets and pulling out,” Holmberg said. “These are folks that are going to look for insurance somewhere, and we would expect that we will see many of those folks.”

Highmark is pricing conservatively, Holmberg said. The company is also looking for ways to use artificial intelligence to reduce administrative costs, he said.

Providence Health Plan is alerting employer clients that exchange coverage losses could drive up their expenses as hospitals pass on uncompensated care costs to commercial customers, President and CEO Don Antonucci said.

“There’s only so many dollars in the system and it has to shift somewhere,” Antonucci said.

These big policy questions are causing problems on top of those insurers already faced, Sanders said.

Utilization is up, insurance companies aren’t faring well in No Surprises Act billing disputes and providers are seeking reimbursement hikes, Sanders said.

“If you are not used to dealing with rate filing uncertainty, this probably is not the market for you,” Sanders said. “You’re just having to make assumptions for all these different layers.”

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