insurers

Insurers may raise premiums when they expect subsidy reductions to cause healthier people to drop coverage, because losing healthier enrollees can leave a sicker and more costly insurance risk pool.

Expiration of premium subsidies can cause adverse selection—younger and healthier people may forgo more expensive coverage—leading insurers to raise premiums for the remaining, older or sicker enrollees and increasing uncompensated care costs for hospitals and government.

When premium tax credits are reduced or allowed to expire and premiums rise, healthier individuals are more likely to drop marketplace coverage, which can worsen the insured risk pool and prompt further premium increases (adverse selection effect).

A 2025 KFF analysis identified main drivers of recent ACA premium increases as increased demand for costly treatments including GLP-1 weight-loss drugs, higher prices from hospitals and other providers, and insurer assumptions that enrollment could decline if premium tax credits expire.