As 2026 approaches, the cost of health care in the United States is set to move in sharply different directions depending on where people get their coverage. While millions of seniors on Medicare are expected to benefit from lower prescription drug costs, many Americans relying on Affordable Care Act (ACA) plans or Medicaid could see higher expenses—or lose coverage altogether.
This growing divide reflects years of policy decisions coming into force at the same time, reshaping how much patients pay and who gets financial relief.
Medicare Enrollees See Long-Awaited Relief
For people covered by Medicare, 2026 brings meaningful cost reductions. Beginning January 1, the federal government’s first-ever negotiated drug prices will apply to the program’s most expensive medications. The changes stem from the Inflation Reduction Act (IRA), which granted Medicare authority to negotiate prices directly with pharmaceutical companies.
The initial round of negotiations covers 10 high-cost drugs commonly used to treat conditions such as heart disease, diabetes, and blood clots. Nearly nine million older adults take at least one of these medications.
According to estimates from advocacy and government groups, out-of-pocket costs for these drugs are expected to drop by more than half on average. Several of them are projected to cost under $100 per month for Medicare patients, delivering billions of dollars in collective savings.
The negotiated prices build on earlier reforms under the IRA, including:
- A cap on annual out-of-pocket prescription drug spending, set at $2,000 in 2025 and rising slightly to $2,100 in 2026
- A $35 monthly cap on insulin for Medicare beneficiaries
Policy experts describe the changes as a significant shift for seniors living on fixed incomes, many of whom previously faced thousands of dollars in drug costs before hitting catastrophic coverage thresholds.
Trade-Offs in the Drug Market
While the Medicare provisions are widely praised, analysts caution that the law has also had unintended effects. Some economists point to a trend of higher launch prices for new medications, as drugmakers seek to offset limits on future price increases.
Recent research suggests that the average net price of newly introduced drugs has risen sharply since the law was enacted, particularly for complex treatments such as gene therapies and specialty neurological drugs. Experts say this trend could continue unless additional policies address how new drugs are priced at launch.
Rising Costs and Uncertainty for ACA and Medicaid Patients
The outlook is far less favorable for Americans who rely on ACA marketplaces or Medicaid.
Enhanced ACA tax credits—introduced during the pandemic to keep premiums affordable—are scheduled to expire. Without congressional action, many enrollees could see premium increases exceeding 100 percent once higher insurance rates and the loss of subsidies are combined.
Early enrollment data from several states already show signs of strain, with some consumers dropping coverage or switching to lower-cost plans that offer fewer benefits.
Medicaid is also facing major changes. Federal funding reductions and the end of certain financial incentives for states are expected to take effect in 2026. In states that have not expanded Medicaid, low-income adults may remain stuck in a coverage gap—earning too much to qualify for Medicaid but too little to afford ACA plans without subsidies.
More extensive Medicaid reforms, including work requirements, are scheduled for 2027. Health policy researchers warn these changes could leave more people uninsured, increase medical debt, and raise uncompensated care costs for hospitals and physicians.
Drug Price Deals Outside Medicare
Outside of Medicare, some consumers may still see limited relief on prescription drug prices through separate federal efforts. The administration has pursued agreements with pharmaceutical companies aimed at lowering U.S. drug prices to levels closer to those paid in other wealthy countries.
These voluntary deals include discounted prices for certain medications, particularly for people paying cash without insurance. High-profile agreements involving weight-loss drugs have reduced costs for uninsured patients and lowered what Medicare and Medicaid pay for those treatments.
However, experts caution that these arrangements depend on ongoing cooperation from drugmakers and do not provide the same long-term certainty as prices set by law. Even with discounts, many medications may remain unaffordable for people who lose insurance coverage due to higher premiums.
What Happens Next
The future remains fluid, especially for ACA enrollees. Some lawmakers have signaled interest in reviving enhanced subsidies, potentially making them retroactive and reopening enrollment if an agreement is reached.
Until then, 2026 is shaping up to be a year of stark contrasts in American health care: historic savings for many seniors, and renewed financial pressure for millions of others navigating an increasingly uneven system.
