A significant healthcare divide is expected to emerge in 2026, affecting Americans differently based on their insurance coverage. On one hand, Medicare beneficiaries may experience savings on prescription drug costs, thanks to the Inflation Reduction Act (IRA) signed into law by President Joe Biden in 2022. The IRA allows Medicare to negotiate prices for certain expensive medications, which will lead to lower out-of-pocket costs for nearly 9 million older adults. Starting January 1, 2026, the first negotiated drug prices will go into effect, with estimated savings of over 50% for seven of the 10 costliest drugs in the program.
On the other hand, individuals relying on Affordable Care Act (ACA) subsidies and Medicaid may face higher costs and uncertainty. The enhanced ACA subsidies, which helped keep premiums affordable, are expiring, and Republicans in Congress declined to extend them. As a result, some people may pay up to 114% more in premiums, on average, when combined with rate increases by insurers. Additionally, changes to Medicaid funding approved under President Donald Trump’s “One Big Beautiful Bill” will take effect in January, potentially leaving low-income adults in a “coverage gap” and without access to care.
The IRA has already had a positive impact on some Medicare beneficiaries, such as Tom Howie, an 81-year-old with a history of heart disease. He has seen a significant reduction in his out-of-pocket prescription drug costs, reaching the $2,000 cap by May this year. However, the law has also brought some unexpected drawbacks, including higher list prices for new medications. Some experts, like Richard Frank, a senior fellow at the Brookings Institution, warn that drugmakers may set prices higher from the outset to avoid penalties for raising prices too sharply.
Meanwhile, the Trump administration has pushed to align prescription drug prices in the US with those in other wealthy countries, striking deals with 14 pharmaceutical companies to offer lower prices in exchange for tariff relief. However, some experts, like Larry Levitt, executive vice president for health policy at KFF, have concerns about the strategy, noting that it relies on voluntary deals with drugmakers and may not lead to long-term savings.
Ultimately, the healthcare divide in 2026 may have significant consequences for Americans, particularly those who are not on Medicare. While some may see drug costs decrease, others may face higher premiums, reduced access to care, and increased medical debt. The situation remains uncertain, with potential for Congress to reach a deal to extend ACA subsidies next year, which could provide relief to those affected.