Why It Matters
Rising health insurance premiums are squeezing Texas employers and workers at a time when the state Legislature is preparing to address affordability in the healthcare market. With nearly half of Texans relying on employer-sponsored coverage and costs climbing faster than wages, the pressure on businesses—from restaurants to nonprofits—is intensifying pressure on policymakers to act.
What Happened
Texas business owners are absorbing sharp increases in health insurance costs, forcing difficult choices about what to pass along to employees. Kyle Citrano, who operates three restaurants in Waco, has seen his health insurance expenses rise roughly 5% since reopening from COVID-19 shutdowns. To manage the burden, he has shifted higher premiums and deductibles to his staff.
The strain extends beyond single-location operators. Credit Human, a nonprofit credit union, saw employee premiums jump 15% this year, and roughly double the number of workers opted out of coverage during the last plan year—even as about 80% of the organization’s workforce participates in its health plan.
State government itself has faced mounting costs. Texas has recorded year-over-year health expense increases ranging from 3% to 9.8% since 2014, according to state budget data. Nationally, employer health insurance premiums for family coverage rose 6% from 2024 to 2025, and analysts project a roughly 9% increase for businesses in 2026.
Consolidation in the healthcare industry—hospitals, insurers, and pharmacy benefit managers merging into larger entities—is a primary driver of premium inflation. The lack of price transparency across healthcare providers and middlemen makes it harder for employers to negotiate rates or shop for better terms.
Both chambers of the Texas Legislature have tasked their members with developing solutions to reduce costs ahead of the January legislative session. State Rep. James Frank, who chairs the House Select Committee on Affordable Healthcare, framed the stakes plainly: “When it boils down, this is about affordability. This is about healthcare and actually being able to afford care.”
Bipartisan momentum exists to address the issue. However, the healthcare industry’s structure complicates reform. The Texas Hospital Association has argued that consolidation helps preserve struggling hospitals by allowing them to pool resources and maintain operations in rural and underserved areas.
Citrano’s experience captures the unpredictability facing small employers. “Every year, it can change on you in a heartbeat,” he said. “You could have your rates jump because your participation is down, someone on your staff could get hurt.”
By the Numbers
5% — health insurance cost increase for Citrano’s restaurants since COVID-19 reopening
15% — employee premium increase at Credit Human this year
$27,000 — average annual premiums for employer-sponsored family health insurance
6% — rise in annual premiums for employer-sponsored family coverage from 2024 to 2025
50% — share of Texans with employer-sponsored health coverage
89% — Texas voters expressing concern about healthcare costs in a January Texas Politics Project poll
Zoom Out
Texas’s healthcare affordability challenge mirrors national trends. Employer premiums across the United States have outpaced wage growth for years, forcing workers to shoulder larger deductibles and cost-sharing while employers face tighter margins. Healthcare consolidation—fewer, larger hospital systems and insurance networks—has reduced price competition in many markets, particularly in rural states and regions with limited provider options.
Several states have passed or are considering legislation to increase price transparency, limit surprise medical bills, or regulate pharmacy benefit manager practices. Texas policymakers are examining similar approaches, though the balance between cost control and preserving access to care in underserved areas remains contested.
What’s Next
The Texas Legislature convenes in January 2027. The House Select Committee on Affordable Healthcare and its Senate counterpart are expected to present legislative proposals targeting transparency, consolidation, and negotiating power for employers and state health programs. Whether lawmakers will attempt to regulate healthcare pricing directly or rely on market-based transparency measures remains unclear as the session approaches.