When President Trump declares he will “fix” insurance rates, he’s making a promise his administration has limited power to keep. The reason is constitutional: states, not the federal government, regulate insurance rates. Each state has its own insurance commissioner or department that reviews and approves (or denies) rate increases proposed by insurers. While the Trump administration can influence insurance costs through broader healthcare and economic policies—such as tariffs, subsidies, and healthcare cuts—it cannot directly mandate lower insurance premiums the way a president might control, say, oil prices or interest rates. This structural reality often goes unexplained when politicians make sweeping promises about insurance affordability.
Yet the Trump administration’s federal actions are already driving insurance costs higher, not lower. In 2026 alone, health insurance premiums are rising an average of 18% nationally—more than twice the 2025 increase and the steepest surge since 2018. UnitedHealthcare requested a 66.4% increase in New York. Arkansas, Illinois, Indiana, and Washington finalized rates exceeding 20%. Homeowners insurance is climbing 4% nationally, marking the fifth consecutive year of increases. These aren’t rates states are choosing to impose—they’re requests from insurers responding to costs that federal policies have exacerbated.
Table of Contents
- Can Trump Actually Lower Insurance Rates Without State Authority?
- The Mechanics of State Insurance Regulation and Its Built-In Limitations
- How Federal Healthcare Cuts Are Directly Raising State-Level Insurance Rates
- Why Consumers Can’t Simply “Shop” Their Way Out of Rising Premiums
- The Hidden Costs: Tariffs and Prescription Drug Inflation
- Homeowners Insurance: A Parallel Crisis with Different Roots
- The 2026-2027 Insurance Outlook: What to Expect
- Conclusion
Can Trump Actually Lower Insurance Rates Without State Authority?
The short answer: not directly. Insurance regulation in America is a state-by-state patchwork. Each state’s insurance commissioner reviews rate filings, examines the insurer’s claims data and medical costs, and decides whether the requested increase is justified. Some states deny rate increases they deem excessive; others approve them with minimal pushback. A few states like New York have stronger oversight, while others prioritize keeping insurers in-market over keeping rates low. When State insurance regulators have legal authority to demand rate reductions, but they rarely wield it aggressively. The reason reflects a core tension in insurance regulation: if a regulator is too strict, insurers can simply stop selling insurance in that state or withdraw from the market entirely. This has happened in Florida, where homeowners insurers have exited the market due to aggressive storm activity and regulatory constraints, leaving the state’s insurer of last resort overwhelmed. In Louisiana and other hurricane-prone states, similar dynamics have created tight insurance markets where regulators must balance consumer protection against market stability. This calculus means states are often reluctant to deny large rate increases, even when they might be justified. Kentucky, for example, saw HMO Bluegrass propose rate increases in 2026 that state regulators ultimately approved despite consumer outcry. States understand that denying rates too often can drive insurers away, leaving fewer options for consumers. The result is a regulatory framework with teeth that rarely bite hard enough. Some states have better oversight than others—New York’s insurance department is notoriously tough; smaller states often have fewer resources to scrutinize filings. But across the country, the pattern is consistent: insurers propose large increases, states approve them or approve them with minor cuts, and consumers pay more. The connection between federal budget cuts and state-level rate increases is direct and measurable. When Congress cut roughly $1 trillion from healthcare spending, including reductions to programs that help offset medical costs, insurers face higher claims. Patients use more emergency rooms instead of preventive care. Hospitals raise their negotiated rates with insurers. Insurers then file for premium increases to maintain their profit margins and cover these higher costs. State regulators review the filings, see the medical cost justifications, and often approve them. The Congressional Healthcare and Budget Office analyzed this dynamic and found that the Trump administration’s healthcare policies are a primary driver of 2026 premium increases. Families USA released a detailed assessment showing that without federal budget cuts and subsidy expiration, 2026 rates would be significantly lower. HMO Colorado’s request for increases exceeding 33% reflects not just state-level factors but the ripple effects of federal policy changes. These rate requests are not invented by insurers; they’re responses to real cost increases that federal policy has created. State regulators can’t ignore cost data, and they rarely deny increases that appear cost-justified, even if the underlying costs were created by federal decisions. Consumers often hear they should comparison-shop for insurance or switch plans, as if the market will solve high premiums. In practice, this advice has serious limitations. In many parts of the country, only one or two insurers dominate the market, leaving little choice. In rural areas, options are even more restricted. When every insurer in a state is raising rates by 15% to 25%, switching doesn’t help—the new plan costs nearly as much as the old one. Additionally, switching plans often means changing doctors, which is a real cost that doesn’t show up in premium comparisons. Employer-based health insurance, which covers most Americans under 65, doesn’t even offer a shopping choice—the employer selects the plans available to workers. Those workers face the same rate increases as everyone else, though some employers absorb part of the increase to protect employees. Self-employed individuals and those buying on the Affordable Care Act marketplaces do have choices, and subsidies still matter—but those subsidies are expiring at the end of 2026. A family that receives a $500/month subsidy now could face a $0 subsidy in 2027 if Congress doesn’t act, effectively doubling or tripling their out-of-pocket costs even without premium increases. Beyond healthcare policy, Trump’s tariff policies are raising insurance-related costs in ways that won’t show up in a premium increase directly but will hit consumers’ wallets. New tariffs on imports from China, Mexico, and Canada are increasing the cost of prescription medications and medical supplies. When insurers have to pay higher claims costs because drugs cost more, those expenses eventually flow into premiums. A patient paying $50/month for a generic drug today might pay $75/month in 2026, and insurers will factor this cost inflation into their rate filings. The Bankrate analysis of tariff impacts on insurance found that auto insurance, health insurance, and homeowners insurance are all affected by tariff-driven cost increases. A blood pressure medication manufactured in India but with imported components might cost 10% more due to tariffs. A cardiac stent imported from Germany faces higher landed costs. Across hundreds of medical products and drugs, tariffs create a cumulative inflationary effect that insurers eventually pass through in premiums. Unlike rate increases that states review and potentially deny, tariff-driven cost inflation is harder to quantify and easier for insurers to justify. Regulators see cost increases, approve them, and the public absorbs the impact. While health insurance rate increases stem primarily from healthcare policy, homeowners insurance increases reflect climate risk and federal disaster mitigation cuts. The average homeowners insurance increase for 2026 is 4% nationally, representing the fifth consecutive year of rising premiums. In some states, increases are steeper—15% to 25% in Florida, Louisiana, and California, where insurers are pricing in increased storm and wildfire risk. The Trump administration’s termination of FEMA’s Building Resilient Infrastructure and Communities Program removed grants that funded mitigation projects—seawalls, improved drainage, wildfire-resistant landscaping. These projects reduce claims costs by preventing or mitigating disasters. Without federal funding for mitigation, climate risk rises, insurers raise rates, and homeowners pay more. Unlike healthcare, where federal cuts drive rates up through cost increases, the homeowners insurance story shows how federal funding cuts eliminate the prevention that keeps rates stable. A homeowner in a flood-prone area might have seen a modest rate increase this year because their community received FEMA mitigation funding; next year, with that funding gone, the increases could accelerate. Looking ahead, 2026 and 2027 will be historically difficult years for insurance affordability. Health insurance premiums will continue rising as the full impact of federal healthcare cuts materializes and subsidy expirations hit in late 2026. If Congress doesn’t extend the enhanced tax credits, millions of Americans will face unaffordable premiums in 2027. Homeowners insurance will continue climbing as climate-related claims accumulate and federal mitigation funding remains unavailable. State regulators will have limited tools to prevent this; they can’t override federal policy, and they face political pressure to keep insurers in-market. The Trump administration may attempt other federal interventions—expanding Health Savings Accounts, promoting association health plans, or encouraging short-term plans—but these alternatives typically offer less comprehensive coverage and higher out-of-pocket costs. They may reduce premiums for some consumers while increasing financial risk for others. The fundamental reality remains: states control rate regulation, but federal policy increasingly shapes the costs states are regulating. When Trump promises to “fix” insurance rates, he’s making a commitment constrained by federalism. States regulate rates; the federal government can only influence the underlying costs that drive rate requests. Currently, federal policy is making those costs worse. A $1 trillion healthcare cut, new tariffs, subsidy expirations, and the termination of disaster mitigation programs are all pushing insurance premiums higher in 2026. State regulators can reject rate increases, but they rarely do when insurers can justify their requests with cost data. For consumers, this means understanding that insurance affordability depends on federal policy choices you won’t see on your rate notice. The promise to “fix” rates without addressing healthcare cuts, tariff inflation, or subsidy expiration is ultimately an incomplete one. Consumers facing 18% health insurance increases or 4% homeowners insurance increases need to know why those increases are happening and where leverage actually lies—in Congress and state legislatures, not just in the executive branch’s rhetoric about fixing markets.
The Mechanics of State Insurance Regulation and Its Built-In Limitations
How Federal Healthcare Cuts Are Directly Raising State-Level Insurance Rates
Why Consumers Can’t Simply “Shop” Their Way Out of Rising Premiums
The Hidden Costs: Tariffs and Prescription Drug Inflation
Homeowners Insurance: A Parallel Crisis with Different Roots
The 2026-2027 Insurance Outlook: What to Expect
Conclusion
You Might Also Like