Bob Carey is superintendent of the Maine Bureau of Insurance.

The Maine Bureau of Insurance, which I lead, announced on Sept. 2 that it has approved requests from health insurers to increase rates an average of 24% in the individual market and 18% in the small employer market, effective Jan. 1, 2026, something that will affect a total of 115,000 Mainers.

While these increases are slightly lower than the insurers’ original requests, I know they are not welcome news. 

Maine is not alone in dealing with spiraling rates. The Kaiser Family Foundation estimates that, nationally, premiums in the individual market are expected to increase an average of 20% next year, and other state regulators are grappling with this same issue. For example, rate requests average 35% in Delaware, 23% in Connecticut, 28% in Colorado and 24% in Rhode Island.

Like many Mainers, I am very concerned about the affordability of health care. Unfortunately, the bureau is limited in what it can do to control proposed rate increases. Maine law directs the bureau to ensure that rates are not “excessive, inadequate or unfairly discriminatory.” In this context, “excessive” is measured by the amount of premium needed to cover expected medical costs.

But just because rates are not “excessive” by law doesn’t mean they’re affordable.

People often wonder whether health insurer profits drive rate increases, but federal law requires insurers to spend at least 80 cents of every premium dollar on health care services. The remaining 20% is used to operate the insurance company and administer the health plans, with a small amount for profit or contribution to surplus. Several insurers in Maine reported that actual medical and prescription drug costs exceeded 90% of premiums in 2024.

When it comes to this year, there are four primary reasons rates are increasing: 1) the increased cost of health care services; 2) the rise in the cost of prescription drugs; 3) greater utilization of medical services, particularly high-cost pharmaceuticals; and 4) policy changes and instability at the federal level from the Trump administration and Congress.

Let’s talk through it a bit more. The jump in health care costs is driven by life-changing — but expensive — innovations in treatment for cancer, cardiovascular disease, obesity and other conditions; higher fees paid to physicians, hospitals and other medical providers;  an increase in the use of behavioral health services; and rising demand for new and high-cost specialty medications.

In 2016, the U.S. spent $211 billion on specialty medications. Last year, we spent $487 billion. In 2025, total health care spending nationwide will surpass $5 trillion.

The rise in premiums in the individual market is also affected by the unwillingness of Congress and the president to extend enhanced premium tax credits, which are scheduled to expire at the end of the year. The Kaiser Family Foundation estimates that if those enhanced tax credits go away, it will result in an average premium increase of 75% for those who receive them.

All of this leaves me worried. Over the past several years, Maine has made tremendous strides  in providing access to affordable health insurance, through the expansion of MaineCare, improved outreach and ease of enrollment through CoverME.gov (which provides access to premium tax credits) and the merging of the individual and small group markets, which has helped slow the growth of premiums. But all of this is in jeopardy.

What does this mean for Mainers?

The loss of enhanced federal tax credits will be startling for those who receive them and will hit older people especially hard. With enhanced tax credits — a Maine couple, age 60 with annual income of $85,000 — pays 8.5% of their income on health insurance premiums, or $7,225 annually. In January, when the tax credits are scheduled to expire, their annual premium will skyrocket to $25,000 for the lowest cost “Bronze” plan that has a $15,000 family deductible.

That’s not the only problem. The end of enhanced tax credits will also mean fewer young and healthy people will enroll in coverage, further driving up premiums for those who remain insured. President Trump’s tariffs and the economic uncertainty they cause will also affect the cost of health care by increasing the price of medical supplies and pharmaceuticals.

Real changes are needed in the way we deliver and pay for health care in the United States, and many of them are beyond Maine’s control – but the most immediate step would be the extension of the enhanced premium tax credits. This short-term bandage will directly benefit more than 60,000 Mainers right now. In the longer term, we need to address the excessive cost of health care, which is increasingly unaffordable.