Health insurance premiums are set to rise sharply for millions in the United States, even as India takes a bold step in the opposite direction by exempting life and health insurance from its national Goods and Services Tax (GST). The contrasting moves, announced within days of each other in early September 2025, underscore the global challenge of making health coverage affordable in the face of rising medical costs and shifting policy landscapes.
On September 3, 2025, state regulators in New York approved health insurance rate hikes for the 2026 plan year, meaning thousands of families and businesses will soon face higher bills. According to CNY News, insurers such as Excellus Health Plan, Highmark Western and Northeastern New York, and Independent Health initially requested increases ranging from 20 percent to over 38 percent. While the New York State Department of Financial Services ultimately scaled these requests back, the approved hikes still average between 7 percent and 13 percent. That’s a significant bump for households already grappling with the rising cost of living, as open enrollment for 2026 approaches.
The Department of Financial Services said it considered several factors in its review, including medical cost trends, prescription drug prices, and the financial stability of insurers. The agency’s intervention may have softened the blow, but the reality remains: health care in New York—and across much of the U.S.—isn’t getting any cheaper. As the department put it, the changes mean New Yorkers must prepare for higher monthly payments when open enrollment begins.
Pennsylvania is facing a similar crunch. Also on September 3, the Pennsylvania Insurance Department (PID) announced that health insurers are seeking average premium increases of 19 percent for individuals who buy their own insurance and 13 percent for small businesses in the 2026 coverage year. As reported by the PID, the expected hikes mirror a nationwide trend: states across the country are seeing average premium increases of 18 percent, which is 11 percent higher than last year.
Recognizing the impact these increases will have, Pennsylvania’s Insurance Commissioner Michael Humphreys said, “We realize that this is not an ordinary filing year for insurers, and Pennsylvanians should be prepared to see higher costs to their health insurance.” To help consumers navigate the changes, the PID is hosting free educational sessions throughout September and October. These sessions aim to explain the rate review process, outline the factors driving premiums higher, and provide practical guidance for comparing plans and provider networks during the November open enrollment period.
One major reason for the anticipated spike in Pennsylvania is the scheduled expiration of Enhanced Premium Tax Credits (EPTC) on December 31, 2025, unless Congress intervenes. These credits have made coverage more affordable for hundreds of thousands of Pennsylvanians through Pennie, the state’s official health insurance marketplace. Currently, half a million people are enrolled with Pennie—the largest number since its inception. Devon Trolley, Executive Director of Pennie, warned, “The increase in rates, the expiration of the enhanced premium tax credits, and other recent federal policies make coverage more expensive and harder to get.”
Without the enhanced tax credits, premiums would jump by an average of 82 percent for Pennie enrollees. That’s a daunting prospect for the three out of four Pennie customers who have only ever known the system with those credits in place. To help, Pennie is ramping up its outreach, urging every enrollee to read communications and log into their accounts starting November 1 to review their options. Free resources, including customer service and local certified assisters, are available to guide consumers through the process.
While Americans brace for higher costs, India is charting a dramatically different course. The GST Council announced on September 3, 2025, that individual life and health insurance policies will be exempt from Goods and Services Tax starting September 22, 2024. As reported by CNBC-TV18, this move eliminates GST rates that previously ranged from 1.8 percent to 18 percent on various insurance products. For example, a health insurance premium of ₹10,000, which currently costs ₹11,800 after GST, will drop to ₹10,000 under the new rule.
The implications for Indian policyholders are immediate and significant. Brokerage firm CLSA estimates that premiums could fall by as much as 15 percent if insurers fully pass on the benefit. Lower upfront costs are expected to encourage first-time buyers, allow existing customers to opt for higher coverage, and help narrow India’s health protection gap. The industry has largely welcomed the change. Rushabh Gandhi, Managing Director and CEO of IndiaFirst Life Insurance, described the exemption as “progressive” and predicted it would accelerate insurance adoption despite some short-term financial strain for insurers.
General insurers, including HDFC ERGO and Bajaj Allianz, noted that the exemption supports the regulator’s ambitious goal of achieving “Insurance for All by 2047” and makes essential coverage more affordable at a time of rising medical inflation. Hanut Mehta of BimaPay Finsure added that lower premiums reduce financing needs per customer while expanding the base of potential policyholders.
But the news isn’t all rosy for Indian insurers. The GST exemption means they can no longer claim Input Tax Credit (ITC) on expenses such as commissions and claims processing, which could push up their net operational costs by 5 to 7 percent. While reinsurance costs have also been exempted, reinsurance typically covers only about 30 to 35 percent of insurers’ expenses, and most individual policies are not reinsured. CLSA analysts warn that insurers may eventually raise premiums by 3 to 4 percent to protect their margins once the dust settles.
Still, the immediate effect is clear: insurance is becoming more affordable for Indian consumers, at least for now. The hope is that this will drive broader coverage and help India make meaningful progress toward universal health protection.
Meanwhile, U.S. consumers—and policymakers—are left grappling with a different reality. Despite efforts by state regulators to keep premium increases in check, health care costs continue to outpace inflation. The expiration of key federal subsidies threatens to make coverage even more expensive for millions, just as economic pressures mount elsewhere. In New York and Pennsylvania, regulators and insurers alike are urging consumers to prepare for higher bills and to seek out available resources to help them make informed choices during open enrollment.
For Americans, the coming year will bring tough decisions about health coverage and household budgets. For Indians, the GST exemption is a rare bit of good news in a sector often defined by rising costs. The divergent approaches highlight both the complexity and urgency of health insurance reform worldwide—and the stakes for families on both sides of the globe.
As 2026 approaches, the only certainty is change. Whether through new taxes, expiring subsidies, or sweeping exemptions, the cost and accessibility of health insurance will remain at the forefront of public concern—and policy debate—for the foreseeable future.
