Nick Tranguch, Chief Growth Officer
Halfway into 2025, consumers and businesses are bracing for a significant increase in health insurance premiums for 2026. While various factors contribute to this rise, recent tariffs imposed on imports from Canada, Mexico, and China are playing a pivotal role. These tariffs are not only affecting the cost of goods but are also indirectly influencing the healthcare sector, leading to higher premiums for individuals and employers alike.
The Impact of Tariffs on Healthcare Costs
Increased Costs of Medical Supplies and Pharmaceuticals
- The 25% tariffs on imports from Canada and Mexico, along with a 10% tariff on Chinese goods, have led to higher costs for medical supplies and pharmaceuticals. For instance, some cancer treatments could see cost increases of up to $10,000 for a 24-week course due to these tariffs. Additionally, generic drug prices are expected to rise from 82 cents to 94 cents per pill on average.
- These increased costs are often passed down the supply chain, affecting insurers, who may respond by raising premiums to maintain profitability, or to employers who act as the payer in self-insured plans.
Supply Chain Disruptions and Inflationary Pressures
- Tariffs contribute to broader economic inflation by making imported goods more expensive. This not only increases the cost of doing business for companies but also introduces uncertainty in the supply chain. Insurers, recognizing the risk of cost overruns and operational delays for businesses, often pass these risks on to policyholders through higher premiums, particularly for commercial policies like business interruption or property coverage
Economic Uncertainty and Conservative Underwriting
- The trade policies behind these tariffs create a volatile economic environment. With the future cost landscape uncertain, insurers are forced to take a more conservative approach to their underwriting. This conservatism results in premium hikes as insurers aim to cover potential future losses driven by tariff-induced cost escalations
ACA Subsidies May Expire: Compounding the Problem
Further complicating the 2026 insurance landscape is the potential expiration of enhanced ACA subsidies. Without Congressional action, the Congressional Budget Office projects that benchmark premiums could rise by 4.3% in 2026 and by nearly 8% annually through 2034.
For employers, this means greater pressure to manage rising costs while maintaining attractive benefit packages. That’s where expert support becomes critical.
How BSI and BSI CORE Can Help Employers Mitigate Rising Costs
BSI specializes in strategic benefits consulting that helps organizations and employees navigate turbulent insurance markets, including those impacted by global economic shifts like tariffs.
Here’s How BSI CORE delivers value to Help Mitigate Costs:
- Data-Driven Plan Design: BSI uses predictive analytics and benchmarking to tailor benefit strategies that reduce waste, optimize plan utilization, and mitigate renewal spikes.
- Advanced Pharmacy Benefit Management: With drug costs climbing due to tariffs, BSI identifies cost-saving pharmacy programs and contract terms that keep pharmaceutical expenses in check.
- Direct Contracting & Alternative Funding Models: BSI helps clients explore innovative funding options like level-funding or self-insured plans, offered exclusively to clients in the BSI CORE funding model, which gives employers greater cost control and transparency.
- Employee Engagement & Wellness: We believe informed employees make better choices. Every client receives customized benefit communications such as monthly educational materials and targeted flyers designed with our clients HR teams to guide employees on using their plans wisely, reducing unnecessary claims and long-term costs.
- Regulatory Strategy & Compliance: With the future of ACA subsidies and other regulations up in the air, we’re keeping our clients ahead of what’s coming. That means timely insights, real-time guidance, and risk mitigation strategies that ensure compliance without unnecessary spend.
At BSI, we don’t believe in waiting for the market to dictate costs. We work hand-in-hand with employers to take control, plan smarter, and stay ahead, regardless of what the economy, politics, or the global trade landscape throws our way.
Opportunity to Turn Disruption into Opportunity
Yes, the landscape is challenging. Global tariffs and domestic policy shifts are pushing 2026 premiums upward. But while you can’t control the external forces, you can control your strategy.
Sources
benefitspro.com+1liveclinic.org+1investopedia.com
https://www.health.com/news/inflation-reduction-act-healthcare-costs-medicare?utm_source=chatgpt.com