Congress returns to DC this week to debate the merits of extending the advanced premium tax credits that enable coverage for 4 million in a climate of high anxiety about U.S. intervention in Venezuela and heightened tension with Russia and China.
For many, these unfolding events are numbing: helplessness, frustration and fear are widespread. As 2026 unfolds for U.S. healthcare, the realities are these:
- The healthcare economy will be under pressure to do more with less. The health economy is increasingly controlled by private investors and large publicly traded companies in every sector whose shareholder obligations are primary. Public funding from federal, state and local sources is shrinking as a result of the Big Beautiful Bill and pushback from taxpayers who think the system wasteful and ineffective. The S&P Health Index for 2025 closed the year underperforming the broader market. Private equity investments in healthcare except AI solutions that reduce operating costs at scale are troubled. Thus, in 2026, operating margins in every sector will be stressed, access to private capital will be vital and business as usual obsolete.
- Mass populism will magnify attention to the healthcare affordability. Per polls, costs of living are issue one to voters. While prices for gas and groceries have moderated, housing and healthcare prices have escalated unabated. Voters think both essential but the majority think consolidation, corporatization and regulatory protections advantage the biggest players and protect special interests. In housing, it’s simpler for consumers: mortgages, rent and utility costs are straightforward. But healthcare is more complicated: out of pocket costs—premiums, co-pays, deductibles, caregivers, OTC et al—are not easily calculable and price estimator tools, patient support and revenue cycle management policies make it easier for consumers. The net result: a large and growing majority of voters think healthcare is unaffordable and government intervention needed.
- The mid-term election November 3, 2026 will be likely be the reset for healthcare’s future in 2028 and beyond. All 435 House Seats, 35 U.S. Senate seats and 39 state/territorial governors will be elected. All will face voters anxious about the future and how they’ll pay their bills. The 2026 results will set the stage for 2028 Presidential campaigns that will feature a wide range of alternatives to the healthcare status quo. Some will be incremental; others labeled radical. But all will promise changes unwelcome to many of its prominent incumbents.
Each sector in healthcare—hospitals, physician services, long-term care, insurers, life science manufacturers, enablers and advisors—is vulnerable. None welcomes unflattering attention and all spend heavily on messaging and advocacy to protect themselves. All recognize the elephant in the room—large employers that have patiently funded the system’s profitability and value protective regulation that limit disruption. And in all, implementation of AI solutions that lower operating costs and streamline performance is THE immediate priority.
The realties of 2026 for healthcare are foreboding: business as usual is not an option.
Paul
P.S. On December 10, I had quadruple bypass surgery. My journey began in July after a missed test result followed by overnight ED stays and continues now to recovery. Along the way, I’ve journaled what the system does well and where it falls short. There’s no doubt ours is a unique industry of which I am proud to be part. It can perform better. Fixing it is not optional.
Resources:
Deal to extend ACA subsidies faces uphill battle despite GOP optimism
America’s affordability crisis is (mostly) a mirage December 30, 2025https://www.economist.com/leaders/2025/12/30/the-truth-about-affordability
Quotables
Gallup CEO on workforce engagement: “We are witnessing a pivotal moment in the global workplace — one where engagement is faltering at the exact time artificial intelligence is transforming every industry in its path. While few employees have harnessed AI’s full potential, its rapid advance will force every organization to adapt, whether they are ready or not. This presents a defining challenge for leaders and managers: Will they seize AI’s opportunities to energize their workforce, or will they risk falling behind?
Gallup News | Nonpartisan Analysis of Critical Global Issues
WSJ on affordability: “Affordability has become a political buzzword, with Americans increasingly voicing discontent about the high cost of everything from housing to groceries to daycare. Workers in many parts of the country say they feel priced out of their communities, unable to afford a mortgage or even monthly rent payments.
That imbalance helped bring a socialist mayor to power in New York City and elect a Democratic mayor in Miami for the first time in nearly 30 years. Hotly contested political races across the country are already centering on affordability as a central issue of the midterm elections. The bank defines the Midwest as Indiana, Iowa, Illinois, Kansas, Michigan, Minnesota, Ohio, Missouri, Wisconsin, Nebraska, North Dakota and South Dakota.”
Americans Are Looking to the Midwest to Find Affordability WSJ January 2, 2026https://www.wsj.com/economy/housing/midwest-affordable-
Health Affairs: Public health in U.S. healthcare: “To be sure, the health care sector has primarily focused on the health of individuals instead of whole populations and communities. Health care cannot fulfill core public health functions, and leaning too heavily on health care risks the medicalization of public health…
These are challenging times for the public health community. As centralized federal authority, systems, services, and personnel are dismantled, the wealth of public health non-governmental actors is a saving grace. But pitfalls are present, and coordination and communication will be critical in what could otherwise be a competitive and contradictory landscape. Governmental and non-governmental public health actors must work effectively together and put community at the center of their efforts. The next few years will be instrumental in strengthening approaches to collectively continue essential public health functions and advance optimal health and well-being for the nation..”
In Public Health, Non-Governmental Actors Are Rising to Meet the Moment | Health Affairs
STAT on AI development: “The health care industry is gearing up for a battle over whether and how clinical artificial intelligence should get paid for. As of the end of September, the Food and Drug Administration has authorized 1,357 AI-enabled medical devices. But very few of those tools are actively paid for by insurers. “
Who will pay for AI in health care? 3 trends to watch in 2026 January 2, 2026 https://www.statnews.com/2026/01/02/health-tech-trends-2026-who-pays-for-artificial-intelligence
Economy
WSJ on China economic growth: “China just registered an unprecedented economic milestone: Its trade surplus has risen above $1 trillion—a first for any country… New data from China’s customs agency shows exports rose 5.4% to $3.4 trillion in the first 11 months of the year, while imports fell slightly to $2.3 trillion. That’s good for a surplus of $1.08 trillion, the largest ever recorded anywhere and a sign of China’s growing dominance in trade across a vast range of products.”
China’s economy just did what no economy has done
Insurers
Fitch Ratings: health insurer headwinds: Fitch issued a “deteriorating” outlook for the U.S. health insurance industry in 2026, citing persistent medical cost pressures, regulatory uncertainty, and fallout from expiring ACA enhanced subsidies. The Dec. 30 report projects medical loss ratios for the seven largest publicly traded insurers will reach an average of 87.9% by the end of 2025, with continued increases expected next year. Notes:
- Commercial group medical costs are expected to climb nearly 9% in 2026, the highest rate in over a decade, driven by inpatient cost inflation, provider consolidation, and specialty drug spending, particularly GLP-1s.
- The expiration of enhanced ACA premium tax credits on Jan. 1 could trigger adverse member selection, with healthier enrollees dropping coverage and leaving insurers with a sicker, more expensive risk pool.
Medicare Advantage margins will remain under pressure despite CMS’s 5.1% rate increase for 2026, which Fitch says won’t fully offset rising utilization trends and regulatory changes, including prior authorization restrictions.
Medicaid faces enrollment losses of nearly 10 million people over the next decade amid impending stricter eligibility requirements and work requirements. Those losing coverage are expected to be healthier than average, leaving higher-acuity members in the risk pool. - Medicaid margins will take another hit as states reduce provider taxes that unlock federal matching funds, with the cap dropping from 6% of net patient revenue to 3.5%, beginning in 2028.
US Health Insurers Face Substantial Cost, Utilization Headwinds
Report: Employer sponsored coverage in 2024: “New data for 2024 shows that employer‑sponsored insurance (ESI) remains the dominant source of health insurance coverage in the United States, covering 54.6% of Americans. For private‑sector workers, ESI plays an even larger role—69.0% of eligible workers, or roughly 64 million individuals—got insurance from an employer or the employer of a family member (e.g., a spouse or parent)…Summary findings include:
- Premiums continue to rise. National annual family coverage premiums increased by over $600, or 3%, to $24,540 in 2024, reaching a price similar to that of a new Toyota Corolla.
- By state, premiums vary considerably. Family coverage premiums in 2024 ranged from $21,988 in Nevada to $28,151 in Massachusetts.
- Deductibles are growing even faster than premiums, at an average rate of over 8% for both single coverage and family coverage between 2023 and 2024.
- After a two‑year decline, over 50% of the nation’s workers (51.7%) and over 50% of workers in 33 states were enrolled in high-deductible health plans (HDHPs) in 2024.
The Struggle to Afford Employer-Sponsored Health Insurance (ESI) in 2024: A 50-State Review
Report: Caveats about private insurance market growth: “Thanks to recently released federal data from surveys conducted by the U.S. Census Bureau and the National Center for Health Statistics (NCHS) at the Centers for Disease Prevention and Control (CDC), we know that the health insurance coverage landscape in the United States underwent several major shifts in 2024. For instance:
- Data from the American Community Survey (ACS) showed that uninsured rates rose significantly in 2024, increasing to 8.2% from 7.9% in 2023.
- Data from the National Health Interview Survey (NHIS) found that the percentage of people with public insurance coverage dropped significantly from 40.5% to 39.1%.
- And data from the Current Population Survey (CPS) found that the percentage of the population with private insurance coverage significantly increased to 66.1% last year from 65.4% in 2023.
While it is encouraging that private insurance increased in 2024 as a potential alternative source of coverage for individuals transitioning from public coverage, two concerns remain.
One, that uninsured rates also increased in 2024, meaning that not everyone who transitioned off of public coverage was able to enroll in another form of health insurance.
And two, despite an increase in private coverage, both ACS and CPS data showed that employer-sponsored insurance (ESI) coverage—the most prevalent form of private coverage in the United States—did not correspondingly increase. ESI enrollment remained statistically unchanged from 2023 to 2024, with forms like direct purchase, Marketplace, and TRICARE driving the overall growth in private coverage. “
ISSUE BRIEF—The Struggle to Afford Employer-Sponsored Health Insurance (ESI) in 2024: A 50-State Review December 10, 2025 https://www.shadac.org/publications/employer-sponsored-insurance-affordability-access-cost-2024
Population Health
Study: housing cost and utilization: “In this cross-sectional study of 233 195 Medicaid beneficiaries aged 19 to 64 years with heart failure, zip code–level housing cost burden was associated with higher odds of cardiovascular-related hospitalizations and emergency department visits….
The findings of this study suggest that area-level housing cost burden may be associated with outcomes among Medicaid beneficiaries with HF and highlights the need to investigate whether strategies that address housing affordability can play a role in improving health outcomes in this population.”
Housing Cost Burden and Outcomes Among Medicaid Beneficiaries with Heart Failure January 2, 2026 https://jamanetwork.com/journals/jama-health-forum
Atlantic on Housing: “We have a housing crisis, as you probably, painfully, know. Wouldn’t you like to have someone to blame for it?
The United States is short 4 million housing units, with a particular dearth of starter homes, moderately priced apartments in low-rises, and family-friendly dwellings. Interest rates are high, which has stifled construction and pushed up the cost of mortgages. As a result, more Americans are renting, and roughly half of those households are spending more than a third of their income on shelter…
Private-equity firms and other deep-pocketed investors aren’t why Seattle and Boston are unaffordable. Those cities have had shortage-driven housing crises that have intensified over decades… Private equity might not be causing the housing crisis, but corporate owners could end up making it a lot worse for everyone.
How Private Equity Is Changing Housing – The Atlantic
“This cohort study found that for adults with end-stage kidney disease, residence in high-disadvantage neighborhoods was associated with a significantly lower likelihood of waitlisting, any KT, live-donor KT, and preemptive KT. The associations between neighborhood disadvantage and KT access were most pronounced among minoritized patients and those residing in the Western regions of the US, and residence in suburban or rural high-disadvantage neighborhoods was associated with especially low access to live-donor KT. The findings suggest that residence in high-disadvantage neighborhoods is associated with reduced access to waitlisting and KT and contributes to persistent racial and ethnic disparities in access to live-donor KT and preemptive KT.
Residential Neighborhood Disadvantage and Access to Kidney Transplantation December 30, 2025 https://jamanetwork.com/journals/jamanetworkopen
Global life expectancy: The Human Development Index (HDI), produced by the UN, tracks progress in life expectancy, education and income. After GDP it is one of the most widely used measures of development. The global score fell in 2020 and 2021—the first declines since the index began in 1990. It recovered somewhat in 2022. The latest report, released on May 6th, shows that the pace of improvement in 2023 was the slowest on record
Which countries have the best, and worst, living standards? May 6, 2025 https://www.economist.com/graphic-detail/2025/05/06/which-countries-have-the-best-and-worst-living-standards
Prescription drugs
Drugmakers raise US prices on 350 medicines despite pressure from Trump
Rare disease exemption: “The One Big Beautiful Bill Act (OBBBA), which was signed into law on 4 July 2025, will strip health care coverage from millions of patients in the United States and impose additional strains on the overtaxed health care safety net. Amid these profound public health rollbacks, the law has also delivered a quiet win for the pharmaceutical industry—one that elevates corporate interests over the health of patients and the budgets of payers…the expanded exemption of rare disease drugs from Medicare price negotiation.”
The Pharmaceutical Industry’s Quiet Win in the One Big Beautiful Bill Act December 30, 2025https://www.acpjournals.org
