Quick answer
Health insurance is expensive because U.S. health care is expensive. Premiums pay for care, and the country spent $5.3 trillion on health care in 2024, about $15,474 per person and 18% of the economy. Prices for hospital stays, doctor visits, drugs and tests are much higher than in other wealthy countries and keep rising. For people who buy their own coverage, costs jumped again in 2026 when the extra federal subsidies expired.
Key takeaways
- National health spending grew 7.2% in 2024, faster than the economy.
- The U.S. spends about twice as much per person on health as similar wealthy countries.
- High prices for hospital care, doctors and drugs are a big part of the reason.
- The average job-based family premium was $26,993 in 2025.
- Marketplace enrollees paid 58% more on average in 2026 after the enhanced tax credits expired.
On this page
Where the money goes
| Category | 2024 U.S. spending | Growth from 2023 |
|---|---|---|
| Hospital care | $1.63 trillion | 8.9% |
| Doctors and clinical services | $1.11 trillion | 8.1% |
| Prescription drugs | $467 billion | 7.9% |
| All health spending | $5.3 trillion | 7.2% |
Private health insurance spending grew 8.8% in 2024. When insurers pay more for care, premiums follow.
Why care costs so much in the U.S.
- High prices. Americans pay more for the same hospital stays, procedures and drugs than people in other wealthy countries. As hospitals and doctor groups merge, they can often negotiate higher prices.
- Prescription drugs. Brand-name and specialty drugs, including GLP-1 drugs used for diabetes and weight loss, cost far more here. See does health insurance cover prescription drugs.
- Tests and procedures. Imaging like an MRI, surgery and even routine blood tests can cost several times what they do elsewhere.
- Administrative costs. Billing, claims processing and insurer overhead add up. Insurers in the individual market must spend at least 80% of premiums on care and quality, or pay rebates.
- Chronic disease and an aging population. More people with long-term conditions means more care.
- Labor. Staffing shortages push wages and payments to providers higher.
In 2024 the U.S. spent $14,775 per person on health consumption, compared with an average of $7,860 in comparable high-income countries, according to Peterson-KFF.
Why premiums jumped in 2026 and 2027
- Enhanced tax credits expired. The extra subsidies available from 2021 through 2025 ended on January 1, 2026. After subsidies, the average marketplace enrollee paid $178 a month in 2026, up 58%, and benchmark premiums rose 26% on average.
- More increases are coming. For 2027, insurers proposed a median increase of 15%. They cited rising medical costs, bigger payments to hospitals and doctors, GLP-1 drugs, and healthier people dropping coverage. For ways to cut your own bill, see how to lower your Marketplace premium.
- Job-based coverage costs more too. The average family premium rose 6% to $26,993 in 2025, with workers paying $6,850 of it.
The House passed a three-year extension of the enhanced tax credits in January 2026, but the Senate hasn’t, so the credits haven’t come back.
What your premium buys
Your premium pays for a plan that must cover essential benefits and caps your yearly costs for in-network care. The Affordable Care Act also bans charging more for pre-existing conditions. See how much coverage health insurance actually offers.
How to pay less
- Check whether you qualify for a premium tax credit or cost-sharing reductions.
- Compare every insurer in your area. Prices for similar plans vary a lot; see the best health insurance companies.
- Look at bronze plans, which can now be paired with an HSA.
- See if you qualify for Medicaid or CHIP.
- Read the cheapest ways to get health insurance and how much health insurance costs per month for a single person.
Going without coverage is tempting when premiums are high, but one hospital stay can cost tens of thousands of dollars. See the worst that can happen if you get sick without health insurance.
Find the lowest price for the coverage you need: compare quotes by ZIP code.
Frequently asked questions
Why is health insurance so much more expensive in the U.S. than in other countries?
Mostly because U.S. medical care costs more, especially hospital care, doctor services and brand-name drugs. Administrative costs are higher too.
Will health insurance get cheaper?
Not soon. Insurers proposed a median increase of 15% for 2027, and the enhanced tax credits haven’t been renewed.
Is health insurance worth it when it’s this expensive?
For most people, yes. It limits what you pay for covered in-network care in a year and gets you negotiated prices, while one serious illness without coverage can cost more than years of premiums.
Sources
- CMS: National health expenditure fact sheet
- Peterson-KFF Health System Tracker: How does health spending in the U.S. compare to other countries?
- Peterson-KFF Health System Tracker: How much and why ACA marketplace premiums are going up in 2027
- KFF: What we know about 2026 ACA marketplace enrollment, premiums and deductibles
- KFF: 2025 Employer Health Benefits Survey
- Congressional Research Service: Enhanced premium tax credit (R48290)
This article is general information, not financial or insurance advice. Last reviewed September 2026.