Health Insurers Warn of Premium Hikes Linked to Trump’s Tariffs
As health insurers brace for what they deem inevitable premium hikes, the looming impact of President Donald Trump’s tariffs has become a point of contention. Reports suggest these tariffs, particularly on pharmaceuticals, are a significant factor contributing to the rising costs that individual and small group plan enrollees will face in the upcoming year.
Significant Increases Expected
Independent Health Benefits Corporation has made headlines by informing New York regulators about its plan to raise premiums for individual market enrollees by a staggering 38.4% in 2026. According to spokespersons, approximately 3% of this increase can be traced back to anticipated cost hikes for medications, especially those affected by tariffs on imported drugs. This trend is not isolated; UnitedHealthcare of Oregon has similarly disclosed that nearly 3% of its proposed 19.8% premium hike for small group plans is linked to tariff uncertainties.
A “Perfect Storm” of Factors
Experts suggest that this increase isn’t just about tariffs. Sabrina Corlette, a research professor at Georgetown’s Center on Health Insurance Reforms, described the situation as a "perfect storm" of rising costs. Trump’s announcement about impending tariffs on the pharmaceutical sector has only added to the uncertainty facing insurers. Such tariffs are expected to affect a wide range of products, from prescription drugs to medical devices.
On Air Force One, Trump confirmed that tariffs on pharmaceuticals were “coming soon” and hinted at unprecedented levels. He stated, “We are looking at pharmaceuticals as a separate category,” indicating that the impacts could be far-reaching and complex.
Pricing Calculations Under Pressure
When it comes to setting monthly premiums, health insurers typically take into account the expected prices of goods and services, along with projected demand. The anticipated tariffs are expected to escalate the prices of essential medical products, which would, in turn, be passed on to consumers. Enrollees may find themselves bearing the brunt of these increases, leading to significant financial burdens.
A notable analysis from KFF policy analyst Matt McGough highlights that many health insurers have already communicated to state regulators that tariffs are driving them to adjust premiums more drastically than they would under stable conditions. “Insurers don’t have any historical precedent or data to project what this is going to mean for their business and health costs,” McGough explained. It makes sense that they are attempting to hedge their bets amid such uncertainty.
Monitoring the Impact of Tariffs
While some insurers have started announcing their plans to increase rates, others are still in a phase of observation. For instance, Kaiser Foundation Health Plan of the Northwest reported to Oregon regulators that, despite monitoring the potential effects of tariffs, they have not yet factored these uncertainties into their premium pricing. They stated, “There is uncertainty around inflation and the economy due to possible tariffs; however, we did not put anything for this in this filing.”
Regulatory Scrutiny
State regulators play an essential role in the landscape of health insurance premiums, possessing the authority to contest and scrutinize insurers’ premium calculations before these figures are finalized. This oversight can ensure that premium hikes are justified and align appropriately with the actual costs incurred by insurers.
As these developments unfold, the effect of the tariffs on health insurance premiums remains an essential topic for enrollees and policymakers alike, raising questions about healthcare affordability in a changing economic climate.
