Health insurance premiums on Obamacare exchanges will increase by 14 percent in 2027 compared with 2026 levels, according to analysis published by the Competitive Enterprise Institute. The blog post examines recent premium announcements from insurers and identifies several factors driving the increases, including exploding costs from medical arbitration disputes, new weight-loss drugs, and shifts in who's enrolled. The analysis argues that these trends point to deeper structural problems in the Affordable Care Act that require congressional reform.
The data reveals sharp contrasts in what's driving costs. Arbitration disputes under the No Surprises Act reached 2.5 million filings in 2025, far exceeding the Congressional Budget Office's initial projection of 17,000 annually, according to the report. In January 2026 alone, 248,000 disputes were initiated. Providers won more than 85 percent of these cases, with payouts ranging from 2.5 to 4.6 times what insurers normally pay in-network doctors. Meanwhile, exchange enrollment for 2026 came in at double the 2020 level, even as expanded subsidies expired. The drop in enrollment hit younger people hardest: 46 percent of those who left were ages 18 to 34, while the share of beneficiaries under 18 actually increased.
The report finds that insurers cite multiple cost pressures in their premium filings, including the expanding use of GLP-1 weight-loss medications and changing risk pools. The authors note that some analysts have argued GLP-1s will eventually reduce healthcare costs through their effects on obesity-related conditions, but "research hasn't supported that, so far." On the composition of enrollees, the report states that "widespread fears that the end of the expanded subsidies would leave the disproportionately sick or higher cost uninsured were mistaken." The analysis also suggests insurers may have overcompensated in their 2026 premiums because projections overestimated how many people would drop coverage when subsidies expired.
The arbitration explosion stems from the No Surprises Act's mechanism for resolving payment disputes when patients receive care from out-of-network providers. The law requires a third party to set the payment rate, but the report explains this has backfired by driving up both direct costs from higher payouts and administrative burdens across the industry. It also creates "a disincentive for providers to participate in payer networks which is one of the primary tools payers have to restrain prices." The premium increases also support a broader hypothesis that the "Great Slowdown" in healthcare cost growth from the late 2010s may be ending. The Centers for Medicare and Medicaid Services Office of the Actuary now predicts national health expenditures will hit 20.6 percent of GDP by 2034, reversing years of slower growth.
The report concludes that "enormous reforms are needed in this sector," including reducing mandatory benefits and allowing a broader range of plan designs. While the Trump administration's CMS has proposed several reforms, the authors argue "the best approach is for Congress to completely overhaul this system to allow enrollees more freedom of choice, which will begin to drive down costs." The bottom line: Obamacare's structural flaws continue to push premiums higher, and patchwork fixes won't solve the problem.