Americans Expect Higher Health Care Costs as Inflation Concerns Persist

By Ginika Igboke

Americans are increasingly worried about rising health care expenses, and expectations of higher prices for food and other essentials also grew in November, according to the latest Survey of Consumer Expectations from the Federal Reserve Bank of New York.

The Dec. 8 report—based on responses from roughly 1,200 rotating households throughout November—found that near-term inflation expectations held steady, while expectations for inflation over a five-year horizon edged slightly downward. Anticipated increases in home prices remained unchanged for the sixth straight month.

Concerns about rising medical costs, however, intensified. Year-ahead expectations for medical care inflation jumped to 10.1 percent, the highest reading since January 2014.

Uncertainty surrounding the future of the Affordable Care Act (ACA) may be adding pressure. Federal ACA subsidies are set to expire at the end of the year, and many Americans shopping for coverage have already encountered substantial premium hikes. Premium changes for 2026 ACA plans vary widely but generally range from 12 to 27 percent, according to Peterson-KFF Health System Tracker—with increases likely to accelerate further if federal subsidies are not renewed.

The consumer expectations report comes days before the Federal Reserve’s final meeting of the year on Dec. 9–10. The Federal Open Market Committee has cut interest rates twice in 2025, each by 0.25 percentage points. A third cut is possible as policymakers aim to ease pressure from elevated interest rates and high commodity prices. Still, Chair Jerome Powell has cautioned that the long-term economic effects of shifting trade, immigration, and fiscal policies remain unclear.

“Inflation has eased significantly from its highs of 2022 but remains somewhat elevated relative to our 2 percent longer-run goal,” Powell said in a September speech in Rhode Island. “The overall economic effects of the significant changes in trade, immigration, fiscal, and regulatory policy remain to be seen.”

He added that uncertainty around future inflation remains high.

According to the New York Fed survey, Americans see a 42.1 percent chance that unemployment will rise over the next year but estimate their own odds of job loss at just 13.8 percent, reflecting strong personal job security. Expected earnings growth held at 2.6 percent.

Households anticipate modest income gains over the coming year but also expect higher spending, likely offsetting those increases. Respondents projected higher costs for food, gas, rent, and college tuition in the months ahead.

“Perceptions about households’ current financial situations compared to a year ago deteriorated notably,” the report stated, with more respondents saying they were worse off than a year earlier.

“Expectations about year-ahead financial situations also deteriorated slightly.”