Americans are increasingly abandoning their employer-sponsored health insurance in favor of cheaper alternatives, as premiums continue to climb. Employees paid an average of $6,850 toward coverage in 2025, nearly $1,300 more than in 2020, according to a Bloomberg report published Wednesday.
Rising Costs Drive Change
Jessica Balcerzak, a 33-year-old nurse in Buffalo, New York, told Bloomberg she saved more than $10,000 annually by switching from her employer's family plan to a lower-cost option. This trend is reflected in declining participation: the percentage of employees enrolled in employer-based healthcare fell from 64% in 2020 to 61% in 2025, as reported by healthcare research firm KFF last year.
Impact on Companies and Premiums
This shift poses challenges for employers, who rely on healthy individuals with fewer claims to balance the costs of sicker employees. The withdrawal of healthier participants can lead to higher premiums for those remaining, according to a January report from Johns Hopkins University.
Marketplace Coverage Also Under Scrutiny
Concerns extend beyond employer plans. Individuals using the Health Insurance Marketplace—created under the Obama administration—often rate their coverage as “fair” or “poor” regarding monthly premiums and out-of-pocket costs for doctor visits, based on an April KFF analysis.
For those who cannot afford employer or Marketplace plans, options are limited. Short-term health insurance, while cheaper, typically has high deductibles and is not required to follow Affordable Care Act rules, meaning it can deny coverage for pre-existing conditions.
Cost-Share Cooperatives
Another alternative is cost-share cooperatives, which pool premiums to pay medical costs. However, these often have minimum coverage costs and may exclude pre-existing conditions.
Future Outlook
The situation is likely to worsen. A 2025 Congressional Budget Office report predicts that recent policy changes to Medicaid and the Marketplace will leave 14 million people uninsured by 2034.
Yet dropping coverage can backfire. KFF found that 59% of uninsured adults struggle to pay medical bills, compared to 30% of those with insurance. Additionally, 62% of uninsured adults are likely to carry medical debt, versus 44% of insured adults.
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