How did OBBBA increase my healthcare costs?

Your health insurance is more expensive this year because of poor people. 

If this statement makes you mad at poor people, you brought this on all of us. Thanks.

The One Big Beautiful Bill Act (OBBBA) increased your health insurance premiums in two meaningful ways:

1. It cut pandemic-era premium tax credits (which help the working poor get healthcare)

2. It cut funding for Medicaid (which pays for healthcare for the very poor)

If you think, “Good. Let those lazy bums pay their own way, just like I do,” that’s a self-own. 

Because now, instead of everyone pitching in their fair share through taxes to subsidize the poor, now people who can afford health insurance are paying the difference out of pocket. 

(People who can afford health insurance = you if you're complaining about how much it costs but still paying.)

Here’s how it works:

Hospitals have to give emergency care, even if someone can’t pay. So when a wino passes out on the street and the cops find him unresponsive, they have to send him to the hospital. 

He’s probably in rough shape besides the alcohol poisoning, so in addition to the ambulance ride, examination, and IV, they probably have to give him other treatments as well. 

In San Francisco, the average cost of the ambulance trip + stabilization in the ER + same-day release is $3,000 – $8,000 per occurrence. 

It’s $12,000 – $30,000 if they’re admitted.

It can be $20,000 – $100,000+ if they need to go to the ICU.

The wino is indigent. He can’t pay for that. So the money comes from 2 sources:

1. Medicaid pays the hospital a discounted price for his care.

2. The hospital prices its services to insured patients slightly higher to cover the loss.

Insurance companies are constantly negotiating with providers (like hospitals) for how much they’ll pay for a given service. As Medicaid funding goes down, hospitals' rates for other payers (i.e. your insurance company) goes up. When OBBBA was passed, insurance companies saw the writing on the wall.

That's why you saw steep increases in healthcare premiums starting in Q3 of 2025.

As costs go up, your insurance company charges you more (through higher premiums, deductibles, and copays) to protect their margins. 

So your insurance got more expensive because now the government is paying for less of the hobo’s care. And you’re picking up the difference. 

But it’s not just the hobos who are adding to the costs. It’s the guy who bags your groceries and the lady who delivers your Door Dash. 

The ACA subsidies make healthcare more affordable for the working poor. When OBBBA made the requirements for Medicaid more stringent while at the same time cutting ACA subsidies, the people who set the prices of your plans knew exactly what it meant: even more uninsured people going to the hospital.

As the premiums go up, more low-income people fall in the gap. As a result, some of the working poor stopped paying for insurance in 2026. With fewer people to share the cost, the price of Marketplace plans increased.

But poor people still get into as many car accidents, have as many heart attacks, and slip on icy sidewalks just as often as they used to. 

Which means that the hospital has to treat them, too. 

Even though they’re not insured. 

The effect was foreseeable and got priced into 2026 premiums as well. Which drives up your rates in the same way the hobo did, even if you're not on a Marketplace plan.

It’s cheaper to be kind and have a single-payer healthcare system. Now you’re seeing why.

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Need help understanding how the changing healthcare landscape affects your business and healthcare costs? We can't fix a broken healthcare system, but we can advise on adjustments to your benefits strategy that give you more flexibility as the landscape changes.

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