The Why Engine
Health insurance

Why are health insurance costs down 9% from a year ago?

Health insurance: −9.0% in the 12 months to September 2026 (U.S. Consumer Price Index), versus +3.7% for prices overall. 1-month −0.2%, 3-month −0.9%, 5-year −18.1%.

Inflation check: Falling while prices rise. −9.0% in a year, versus +3.7% for prices overall.

The short answer

  • The health insurance index measures insurers' retained earnings rather than gross consumer premiums, meaning the category dropped 9.0% over the past year as surging medical utilization severely compressed carrier margins. [1] [2]
  • Over the prior two years, the index rose 12.0% as premium repricing and a revised calculation formula smoothed out steep pandemic-era declines before widespread underwriting losses pushed the measure lower again. [1] [2] [3]

What's driving the price

Political, regulatory and trade factors

  • Shift to Smoothed Semiannual Methodology (Sep 2023 to Sep 2025), Bureau of Labor Statistics: Following recommendations from the Committee on National Statistics, the Bureau of Labor Statistics introduced a two-year moving average and semiannual data updates in October 2023 and May 2024, halting earlier double-digit declines and lifting the index by 12.0%. [pushed prices up] [3] [5] [6]
  • Affordable Care Act Medical Loss Ratio Enforcement (Sep 2024 to Sep 2026), Department of Health and Human Services: Statutory requirements mandating that health insurers spend at least 80% to 85% of premiums on medical care triggered $1.64 billion in mandatory consumer rebates for 2024, capping the retained margins carriers could keep. [pushed prices down] [8]
  • Removal of Long-Term Care Insurance from Pricing (Oct 2025 to Sep 2026), Bureau of Labor Statistics: In October 2025, the Bureau of Labor Statistics officially removed long-term care insurance from the health insurance index after market changes rendered the product out of scope for pricing. [pushed prices down] [9]

Macro factors: supply, weather, disease, energy

  • Surge in Medical Claims and High Loss Ratios (Sep 2025 to Sep 2026): Healthcare utilization and hospital expenses increased 14.8% in 2025 according to the National Association of Insurance Commissioners, pushing aggregate medical loss ratios to 90.3% and generating a $10.4 billion industry underwriting loss that sharply reduced retained earnings. [pushed prices down] [2] [4]
  • Post-Inflation Commercial Premium Repricing (Sep 2023 to Sep 2025): Insurers increased earned premiums to recover previous hospital wage and supply cost increases, which temporarily expanded premium revenue ahead of medical claims and widened retained earnings in the trailing data periods. [pushed prices up] [1] [7]

Supply chain right now

  • Provider claims and clinical care (critical): Record patient utilization and hospital costs elevated industry loss ratios above 90% in 2025, shrinking margins. [2]
  • Administrative and operational delivery (moderate): Administrative expenses rose 4.4% to $5.8 billion in 2025, though the expense ratio slipped to 10.3% of premium revenue. [2]
  • Underwriting margin and regulatory capital (critical): Industry underwriting losses ballooned to over $10 billion in 2025, directly contracting the retained earnings tracked by the index. [4]

Researched 2026-10-18 with Google Search. Every point links to its sources; unsourced claims were removed.

Health insurance prices, last 12 months

MonthChange from a year earlier
September 2026−9.0%
August 2026−8.5%
July 2026−8.0%
June 2026−7.4%
May 2026−6.4%
April 2026−6.1%
March 2026−5.3%
February 2026−3.6%
January 2026−2.2%
December 2025−0.5%
November 2025+0.6%
September 2025+4.2%
August 2025+4.3%

Source: U.S. Bureau of Labor Statistics, Consumer Price Index (CPI-U), series CUUR0000SEME.

Sources

  1. Improvements to the CPI Health Insurance Index : U.S. Bureau of Labor Statistics (bls.gov)
  2. content.naic.org (content.naic.org)
  3. Recent and upcoming methodology changes: 2023 : U.S. Bureau of Labor Statistics (bls.gov)
  4. beckerspayer.com (beckerspayer.com)
  5. bls.gov (bls.gov)
  6. reddit.com (reddit.com)
  7. content.naic.org (content.naic.org)
  8. A Brief Summary of the 2024 Health Insurance Medical Loss Ratio and Rebates Results | MFA Briefs (markfarrah.com)
  9. Measuring Price Change in the CPI: Medical care : U.S. Bureau of Labor Statistics (bls.gov)

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