Fitch Report Highlights Deteriorating Outlook for Health Insurers in 2026

A new report from Fitch Ratings warns of a “deteriorating” outlook for the U.S. health insurance industry in 2026, citing a perfect storm of rising costs and regulatory headwinds across all major markets, as reported by Becker's Payer Issues.

• A costly cocktail: Runaway medical costs are at the core of the problem, projected to climb by nearly 9% in 2026—the sharpest increase in over a decade. The surge is fueled by a combination of inpatient cost inflation, ongoing provider consolidation, and massive spending on specialty drugs, particularly the blockbuster GLP-1 weight-loss medications.

• No safe harbor: The pain is spread across every market segment. The recent expiration of enhanced ACA subsidies is expected to saddle insurers with a costlier, higher-risk group of members. Meanwhile, Medicare Advantage margins are being squeezed, and Medicaid faces a projected loss of 10 million enrollees, leaving a higher-acuity membership base that costs more to cover.

For insurers, 2026 looks to be a year of hunkering down and prioritizing profitability over growth. The combination of rising costs, sicker risk pools, and regulatory pressures creates a challenging path forward for the industry. The financial squeeze is having real-world consequences, with some health systems now dropping Medicare Advantage plans altogether. In response to subsidy expirations, states are scrambling to figure out how to manage the fallout. The cost pressures are also hitting consumers directly, as Medicare Part B premiums are set to rise in 2026.