Insurers Seek 14% Premium Hike for Small Business Health Plans in 2027, KFF Analysis Finds
核心洞察
Insurers are requesting a median 14% premium increase for the small group market in 2027, with most filings proposing hikes between 10% and 20%, according to a KFF (搜索) analysis of nearly 300 insurers across all 50 states and Washington, D.C.
Rising medical costs, expensive specialty drugs including GLP-1s, and the financial impact of the No Surprises Act are cited by insurers as primary drivers of the proposed rate increases.
The fully-insured small group market has shrunk from 17 million enrollees in 2013 to 10 million in 2024, with many employers migrating to level-funded plans that lack ACA consumer protections.
Small businesses across the United States could face a double-digit increase in health insurance premiums next year, as insurers contend with escalating medical costs, rising prescription drug spending, and the downstream effects of federal legislation. According to a new analysis from the health policy research organization KFF (搜索), insurers are requesting a median 14% premium increase for the small group market in 2027.
The analysis, which examined preliminary rate filings from all 50 states and Washington, D.C. for nearly 300 insurers selling small group coverage to employers with fewer than 50 workers, found that most insurers are seeking rate hikes between 10% and 20%. Six insurers filed for increases exceeding 30%.
Drivers of Rising Premiums
Insurers pointed to multiple factors behind the proposed increases, chief among them the rapid escalation of underlying medical costs. Hospital services, prescription drugs, and increased utilization by plan members were all cited as significant contributors.
"Costs for medical care and medications for our members have escalated rapidly and spending is now growing at the fastest rate in more than a decade," Blue Cross and Blue Shield of Massachusetts (搜索) stated in its rate filing. "The surge in spending is putting a heavy burden on our employer customers and members who are struggling to keep up with rising costs."
GLP-1 receptor agonists (搜索) emerged as a particularly notable cost driver. Originally indicated for diabetes (搜索) management, these drugs have seen surging demand for weight loss and are being investigated for additional conditions. While some insurers have discontinued anti-obesity (搜索) coverage due to the high price of GLP-1s, spending continues to climb as more diabetes patients utilize the medications, the KFF (搜索) found.
The No Surprises Act Factor
Among the 82 small group insurers whose filings KFF (搜索) reviewed in detail, two New York-based plans explicitly cited the financial impact of the No Surprises Act (NSA), the landmark consumer protection legislation enacted in 2020. The law established a mechanism for insurers and providers to resolve out-of-network reimbursement disputes, shielding patients from unexpected medical bills. However, providers have prevailed in a majority of billing disputes, securing payments well above standard network rates.
Oxford Health Insurance (搜索) of New York and UnitedHealthcare (搜索) Insurance Company of New York — both subsidiaries of UnitedHealthcare — reported adding 0.8% to their proposed 2027 rates specifically due to NSA-related costs. UnitedHealthcare recently disappointed investors after reporting unexpectedly high spending in its commercial business, with executives attributing the pressure to the No Surprises Act.
Shrinking Market, Shifting Risk Pools
The proposed premium increases arrive against a backdrop of long-term enrollment decline in the fully-insured small group market. According to KFF (搜索) data, enrollment has fallen from 17 million individuals in 2013 to 10 million in 2024. Yet coverage rates among small business employees have remained relatively stable, suggesting that many employers are migrating to self-funded or level-funded arrangements rather than dropping coverage entirely.
Level-funded plans, in which employers pay a fixed amount for health coverage and may receive refunds if actual medical spending falls below projections, are generally less expensive for businesses with healthier workforces. However, these products are typically not subject to the Affordable Care Act's benefit requirements, allowing insurers to adjust premiums or deny coverage based on pre-existing conditions and other health factors.
"Continued growth in the popularity of alternative coverage options for small businesses, like level-funded plans, has the potential to further erode the fully-insured small group risk pool and could contribute to future premium increases for small businesses, particularly those with sicker employees who may not qualify for or are priced out of a level-funded arrangement," KFF (搜索) researchers wrote.
The 14% median increase for 2027 exceeds the 11% median increase insurers sought for 2026 and is comparable to the rate hikes proposed in the Affordable Care Act marketplaces for the coming year. Last year, only 51% of firms with fewer than 25 workers offered health insurance, compared to 97% of companies with at least 200 employees — a gap that could widen further if the proposed premium increases take effect.