Small businesses that offer health insurance to their employees could see health costs rise in 2027, according to a new analysis of preliminary rate filings from all 50 states and DC. Nearly 300 insurers offering small group coverage reported a median proposed premium increase of 14% for next year. Small group insurers say rising medical prices, including for hospitalizations, physician care, and prescription drugs, and increased utilization are major drivers of the premium increases.
Among the other drivers, insurers point to the continued decline in small group plan enrollment, as more small businesses shift to alternative coverage options like self-insurance or stop offering health coverage altogether to lower costs. The number of people in the fully insured small group market declined by 41% between 2013 and 2024, from about 17 million to 10 million. If healthier and less expensive groups leave the market, this drop in enrollment could push up premiums for fully-insured plans.
The proposed premium increases for small business plans, which are separate from individual or ACA Marketplace plans, are similar to the 15% increase that ACA Marketplace insurers are proposing for next year.
