The ongoing federal government shutdown continues to be stalled by disagreement in Congress over the cost of health insurance for 22 million people who have plans acquired through the marketplaces established by the Affordable Care Act (ACA).
Meanwhile, a new report shows that over 154 million people with employer-sponsored health coverage are facing steep price increases. The research concludes that the situation could worsen.
According to an annual employer survey published on October 22 by KFF, health insurance premiums offered by employers increased by 6% in 2025, reaching an average of $26,993 per year for family coverage.
This marks the first time in two decades that the cost of insuring a family of four has increased by 6% or more for three consecutive years, according to KFF data.
Over the past five years, the average premium for family coverage has risen by 26%, compared to a 29% increase in worker wages and nearly 24% in inflation. Today, the cost of health insurance for a family is roughly equivalent to purchasing a new Toyota Corolla hybrid.
The average annual premium for an individual plan provided by employers rose by 5%, reaching $9,325, nearly $3,000 more than in 2016, according to the survey.
“We are concerned that health care costs continue to rise,” said Eric Trump, the accounting manager at Steve Reiff Inc., a small company in South Whitley, Indiana, specializing in sandblasting and painting heavy machinery.
Trump, who is not related to President Donald Trump, noted that the company’s health plan costs increased by 8% for fiscal year 2026, similar to previous years.
Most of Reiff’s employees pay around 50% of their health coverage costs. About half of the 20 employees declined insurance because they are covered through a family member or prefer not to have coverage. “We can’t do much about it; we don’t have enough employees to spread the cost,” Trump explained.
The majority of individuals with employer-sponsored health insurance contribute to paying their premiums. This year, the average worker contributed $1,440 for individual coverage and $6,850 for family coverage.
Over time, many workers have had to bear higher deductibles – the amount they must pay out of pocket for medical services before their insurance kicks in. More than a third of insured workers are enrolled in plans with a deductible of $2,000 or more per person. According to the report, the proportion of workers with such a plan has increased by 32% in the last five years and 77% in the last decade.
Rising drug and hospitalization costs are often cited as the main drivers of health insurance price increases, and neither of these factors shows signs of decreasing.
“The early reports indicate that costs will continue to rise in 2026, which could lead to even higher premium increases unless employers and insurers find ways to offset these costs through changes in benefits, cost-sharing, or plan design,” the KFF survey states.
One of the issues that concerns employers the most is the high price of GLP-1 weight loss medications, which more and more companies are covering. The high prices, along with high demand, have led some companies to restrict or eliminate coverage for these medications.
“Large companies know that these new, very expensive weight loss medications are an important benefit for their workers, but their price often exceeds expectations,” said Gary Claxton, author of the study and senior vice president of KFF, in a press release.
“It is not surprising that some companies are reconsidering access to weight loss medications,” he added.
Employers often respond to rising health care costs by shifting some of these expenses to their workers, but it is unclear how much more they can economically withstand. The survey showed that nearly half of large companies said their employees are “quite” or “very” concerned about how much they have to pay out of pocket.
While the rise in employer-paid insurance prices has outpaced general inflation, the issue has received little attention in Congress in recent months.
To help finance the expansion of tax cuts, President Trump’s tax and public spending law reduces by billions of dollars the amount the government allocates to Medicaid, the federal and state health insurance program that covers 70 million low-income and disabled people. Congressional budget analysts predict that these cuts will cause millions of people to lose their health coverage over the next decade.
The federal government has been shut down since October 1, as Democrats refuse to approve a new federal budget unless Republicans agree to extend the subsidies that help around 22 million people acquire health coverage through the ACA marketplaces.
Without Congressional intervention, these subsidies (also known as tax credits) will expire, and premiums will double for many consumers starting in January.
The KFF report is based on a survey conducted this year of 1,862 non-federal public and private employers, randomly selected, with 10 or more employees.
Phil Galewitz:
pgalewitz@kff.org,
@philgalewitz
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