Why retirees’ Medicare premiums are going up in 2026
One public health expert says the system is broken
Updated:
Photo by National Cancer Institute on Unsplash
Key Insights
- Federal subsidies that have kept Affordable Care Act premiums manageable are set to expire at year’s end, threatening major cost spikes for millions of Americans.
- Open enrollment begins amid premium hikes of up to 59%, driven by both the loss of government subsidies and decades of rising health care prices.
- Health policy expert Gerard Anderson says controlling health costs will require deeper structural change to how Americans pay for care—not just new legislation.
Health insurance premiums in the United States have been rising for decades—and 2026 could mark one of the steepest climbs yet. Retirees on Medicare will also feel the pain.
While premiums for plans under the Affordable Care Act will rise the most, AARP estimates the standard monthly premium for Medicare Part B is projected to rise from about $185 in 2025 to approximately $206.50 in 2026 — roughly an 11.6 % increase.
The annual deductible for Part B is also projected to climb — from around $257 in 2025 to about $288 in 2026. For Medicare Part D (prescription drug coverage), premiums vary by plan, but the base premium is projected to increase (though more modestly) — for example, a projection of about $38.99 for 2026.
More costly care
Gerard Anderson, a professor of Health Policy and Management and International Health at Johns Hopkins University, said it’s not that people are using more health care, it’s that prices keep going up.
For years, policymakers have tried to rein in costs through laws such as the Hospital Cost Containment Act and the Medicare Prospective Payment System, but those efforts barely dented the curve.
On the “Public Health On Call” podcast, Anderson explained that while Americans aren’t seeing doctors or hospitals more often, the cost of every service, whether a routine test, hospital stay, or prescription drug, continues to climb. Those escalating prices translate directly into higher insurance premiums.
“Health care inflation is largely a story of prices, not quantity,” he said. “We’re paying more for the same care.”
How the ACA changed the landscape
Since its implementation in 2014, the Affordable Care Act has provided coverage to roughly 30 million people, many of them gig workers, freelancers, or employees of small businesses without employer-sponsored insurance. Before the ACA, insurers could deny coverage to people with preexisting conditions.
The law pooled both healthy and sick individuals together and used federal subsidies to offset costs for low- and middle-income enrollees.
Those subsidies are now expiring. Without them, enrollees may face 25% to 30% higher premiums, not because plans themselves are that much costlier, but because the government is no longer absorbing part of the bill.
Anderson warns that the loss of subsidies could trigger a dangerous cycle: as young, healthy enrollees drop coverage they can no longer afford, only older and sicker individuals remain in the insurance pool. That drives prices up even further, a phenomenon economists call the death spiral.
“At large, self-insured companies, the average premium is about $25,000 to $27,000 a year,” Anderson noted. “For someone making $100,000, that’s nearly a third of their income after taxes. Most people can’t sustain that.”
The ripple effects could extend across the entire health care system. Hospitals, physicians, and drug manufacturers all rely on insured patients to get paid; when coverage declines, so does revenue.