The Economic Impact of a 15% Increase in ACA Premiums: Assessing the $60 Million GDP Reduction

As open enrollment approaches on November 1, the focus is usually on what households will pay. But rising health insurance premiums are more than a household budget issue; they also represent a broader economic challenge. When unsubsidized households allocate more income to insurance, their discretionary spending on housing, dining, and retail decreases. IMPLAN looked at what happens next: where that money would otherwise have gone, and how that shift ripples throughout the entire economy.

Insurers have proposed a median 15% increase in Affordable Care Act (ACA) marketplace premiums for 2027, marking the second consecutive year of premium hikes. The expiration of enhanced premium tax credits at the beginning of 2026 contributed to a decline in marketplace enrollment. To assess the broader economic implications, IMPLAN modeled changes in spending patterns among unsubsidized marketplace households in response to a 15% increase in premiums. All figures are presented in 2027 dollars.

Key Finding: IMPLAN estimates that the proposed premium increase will result in a loss of more than 1,500 jobs and approximately $60 million in GDP, as households reduce expenditures across sectors including restaurants and healthcare services.

Analyzing Changes in Household Spending Patterns

The analysis was conducted at the national level using IMPLAN, employing a net analysis approach with two events per household income bracket. One event modifies the household spending pattern to reflect the 15% ACA premium increase within the IMPLAN commodity ‘Other insurances,’ adjusted for the share of health insurance purchases relative to other insurance types, based on BEA data published by the Federal Reserve. The second event maintains the original spending pattern.

Both events utilize the same dollar amount: negative for the unchanged spending pattern and positive for the adjusted spending pattern. This amount is determined by total expenditures per household group, adjusted for the number of unsubsidized households purchasing coverage through the marketplace. The number of unsubsidized households was calculated using data from the Centers for Medicare & Medicaid Services (CMS) and the Census Bureau’s Current Population Survey (CPS).

Insurers Gain $625 Million, While the Overall Economy Experiences a Net Loss

Increased premium expenditures by marketplace enrollees are projected to reduce U.S. GDP by approximately $60 million and total output by about $26 million. Insurance carriers, agencies, and other federal government enterprises are expected to gain roughly $625 million in output, with insurers adding more than 1,300 jobs. However, declines in other industries due to shifts in household spending outweigh these gains.

The housing sector experiences the largest reduction in output, with owner-occupied housing declining by $65 million and tenant-occupied housing by $20 million. The healthcare sector is also significantly affected, as hospitals decrease by $35 million and physicians’ offices by $20 million. Additional impacted industries include monetary authorities, full- and limited-service restaurants, and motor vehicle and parts dealers.

GDP declines are concentrated within similar industries. Owner-occupied housing decreases by $56 million, hospitals by $20 million, tenant-occupied housing by $19 million, and monetary authorities by $15 million.

The healthcare sector is also adversely affected. Increased insurance costs reduce families’ ability to spend on direct care, resulting in hospitals and physicians’ offices losing approximately $55 million in business activity and about 240 jobs.

A Net Loss of Over 1,500 Jobs Across Multiple Sectors 

Employment declines by more than 1,500 jobs. While insurance carriers and agencies add over 1,300 positions, job losses in other sectors surpass these gains. Full- and limited-service restaurants lose 240 jobs, hospitals and physicians’ offices lose another 240, individual and family services lose 90, and both general merchandise retail and food and beverage retail each lose 80 positions.

By occupation, sales representatives, business operations specialists, and administrative support workers collectively gain more than 330 full-time equivalent (FTE) positions. The largest losses occur among home health and healthcare diagnosing workers (250 FTE), followed by retail workers (150 FTE), food and beverage serving workers (130 FTE), and material moving workers (100 FTE).

A Second Consecutive Year of Premium Increases Continues to Constrain Household Budgets

Increased ACA premiums alter household spending patterns, diverting expenditures from other industries. These ripple effects extend to healthcare providers, including hospitals and physicians, as well as industries connected through supply chains and consumer spending, such as restaurants and retail. As premiums rise for a second consecutive year, households continue to adjust their budgets, and some may forgo coverage entirely.

Want to see how household spending moves through the economy in another setting? Our analysis of higher summer travel costs follows the same trail. And if you’re ready to model your own scenario, learn more on the ‘What is IMPLAN’ page or schedule a demo today.