Health care costs are rising rapidly and now represent 1 of every 5 dollars spent in the U.S. economy. A new Peterson-KFF Health System Tracker report identified eight trends that are shaping health care costs in 2026.
Health care costs remain top of mind for many Americans. Consumers identify health care at the center of the affordability crisis, above food, rent and utilities. Affordability remains a concern for people with various types of insurance, from individual market plans to employer-sponsored insurance.
Premiums have increased across commercial and individual marketplaces. In advance of to the midterm elections, the drivers of health care spending and alternative policy proposals -- such as restoring enhanced ACA tax credits and reversing Medicaid cuts from Democrats and expanding health savings accounts from Republicans -- may attract sustained attention.
The public and private sectors are looking for solutions as U.S. spending on prescription drugs continues to increase. The Inflation Reduction Act, including Medicare price negotiations for a list of eligible drugs, led to lower costs for some beneficiaries and the federal government. However, Americans continue to pay more for the same drugs than peer nations.
Transparency for health care prices has momentum. Providing clear and accurate pricing should, in theory, improve the ability of consumers and employers to negotiate or shop for lower prices. Many employers, consumers and advocates believe this data could improve affordability by allowing more informed purchasing choices.
Federal and state policymakers show interest in addressing the impacts of health care consolidation. Policymakers at both the federal and state levels see opportunities to reduce consolidation or increase the competitiveness of health care markets in other ways. For example, recent bipartisan legislative proposals include restrictions on anticompetitive contract clauses between providers and payers, and prohibitions on some types of vertical consolidation.
The use of artificial intelligence in health care is likely to accelerate coding intensity, placing upward pressure on spending. Better documentation increases the proportion of visits that can be coded as higher complexity, which in turn increases billing. Payers already are finding that AI-driven documentation and coding is increasing billing amounts.
States are responding to funding and program implementation pressures with changes to Medicaid, beginning in 2027. States are grappling with shouldering more costs of the Medicaid program as well as implementation costs of the new community engagement requirements and more frequent eligibility redeterminations. In response to anticipated budget shortfalls, states are weighing a variety of actions to cut Medicaid reimbursement rates and limit benefits such as dental care.
Effective distribution of Rural Health Transformation Funds will require rapid state action. Each state has proposed using some of the funds to deploy various technology- enabled health care solutions, including expanding telehealth infrastructure; deploying remote patient monitoring for certain conditions and patient populations; modernizing electronic health record systems; or using AI to support administrative functions, clinical decision-making and patient management of care.
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