Why Health Care Premiums Continue to Rise

• By: Olivia Overman
• October 20, 2025

U.S. consumers spent $4.9 trillion on health care in 2023, according to the American Medical Association. Over the last 33 years, personal health care spending has seen significant annual growth, increasing 9.4% in 2023, the largest uptick since 1990. Meanwhile, spending on prescription drugs and hospital care rose 11.4% and 10.4%, respectively, the report said.

While the U.S. health care sector remains highly rated, in 2024 the industry experienced a significant decline in both net income and profit margin, according to the National Association of Insurance Commissioners (NAIC). Net income dropped to $9 billion, a decline from $25 billion in 2023, while the market’s profit margin fell to 0.8% in 2024, down from 2.2% in 2023, reflecting a substantial reduction in profitability.

The decline in profitability is driven primarily by increased medical costs and record‑high utilization, the costs of which are being passed on to consumers through increased premiums in both the employer and individual health care markets, creating challenges for American families.

A recent report by KFF said that just under half of U.S. adults say it is difficult to afford health care costs, and 1 in 4 say they or a family member in their household had problems paying for health care in the past 12 months.

Even Venus Williams, a seven-time tennis Grand Slam winner, is not immune to the squeeze. She claimed that her return to tennis after a two‑year singles drought was because she needed the health insurance. Speaking at the Mubadala Citi DC Open in Washington, D.C., in July, Williams quipped that after years of health issues, the cost of health care was a concern. Though Williams is a multi‑millionaire, the premiums captured her attention.

While it is lower‑income and uninsured adults who are the most likely to report trouble affording health care costs, those with health insurance and those with higher incomes are impacted by the high cost of medical care, according to KFF.

As health care costs continue to rise due to medical loss ratios passed along from carriers and inflationary pressures, many people face difficulties affording medical care and drugs, even among those with insurance.

In particular, prescription drugs play a significant role in increasing health care costs, with Americans spending approximately $98 billion out of pocket on prescription drugs, a 25% increase over the past five years.

More than 3 in 4 adults in the U.S. think the costs of prescription drugs are unaffordable, and nearly 1 in 3 adults say they haven’t taken their medications as prescribed due to costs.

Additional factors contributing to increased health care spending include an aging population, improved technologies and worsening rates of chronic conditions. Further, in the market in general, the number of private health insurance companies in each state has decreased, leading to more concentrated markets, according to the Government Accountability Office (GAO).

Affordability is a key concern for consumers. Almost 38% of insured adults under the age of 65 worry about affording their monthly health insurance premium, according to KFF, and large shares of adults with employer‑sponsored insurance and those with Marketplace coverage rate their insurance as “fair” or “poor” when it comes to their monthly premium and out‑of‑pocket costs to see a doctor.

For consumers in the market for health coverage, independent agents can play a significant role by providing plan options and advice on shopping for and enrolling in health plans.

Nearly half—approximately 4 million—of all Marketplace enrollees using HealthCare.gov for 2020 were assisted by an agent or broker, according to The Center for Medicare and Medicaid Services (CMS). While there are other options, such as federally funded navigators to assist consumers with advice on and enrolling in health coverage, agents have shown themselves to be a more effective option for enrolling consumers in coverage.

Coupled with policy changes and health insurance marketplaces, improved awareness and enrollment support have helped the number of Americans without health insurance to decline by 8.2 million between 2019 and 2023, according to the CDC.

Olivia Overman is IA content editor.