Health Insurance Premiums Are Jumping Again in 2027, and Small Business Will Feel It Most
A second straight year of double digit premium hikes is about to hit paychecks, hiring and small business budgets right as open enrollment opens.
Open enrollment hits next month and for a lot of people the number on the screen is going to be ugly. Insurers selling on the ACA exchanges have proposed a median 15 percent premium increase for 2027, according to a KFF analysis of insurer filings across all 50 states and Washington, D.C. That's the second year in a row of double digit hikes. Last year the median proposed increase was 18 percent, and insurers ended up finalizing an even higher 20 percent.
This isn't just a budget line item anymore. KFF found healthcare costs, tied with gas prices, now outrank food, housing and utilities as voters' top economic concern heading into the midterms. Pew found 64 percent of Americans call healthcare a very important issue, ahead of immigration, foreign policy, crime or AI.
Why Your Paycheck Feels It Even With Employer Coverage
About 160 million Americans get insurance through an employer, and that's where this starts to hit jobs directly. Marsh, the benefits consulting firm, projects employer health plan costs will rise 8 to 10 percent next year, the biggest jump in more than two decades. Last year a family of four on a job based plan averaged about $27,000 in premiums.
Matthew Rae at KFF put his finger on the mechanism: if employers are contributing more, it means there's less money as a firm for investment or for wages or for hiring new people. It crowds out other things that we may think are beneficially good, he said. Every extra dollar a company puts toward the health plan is a dollar that doesn't go into a raise, a bonus or the next hire.
Small Businesses Are the Ones Who Actually Drop Coverage
The pain isn't spread evenly. Rae said KFF is seeing really high projected rate increases for small group firms going into 2027, and that it may lead some small firms to just throw their hands up and give up coverage. A big company can absorb an 8 percent jump by trimming elsewhere. A ten person shop usually can't, not without cutting a job, freezing pay or dropping the plan entirely.
If you're thinking about starting a business right now, that's a real cost to plan for before you ever sign a lease or hire your first employee. Health coverage isn't something you figure out later. It's one of the first numbers that decides whether a new hire is affordable at all.
What Renewal Season Looks Like From the Inside
I run my own insurance agency, and renewal season is where all of this stops being a headline and becomes real. A rate increase on paper is one thing. Watching a client open a renewal letter and see a number that doesn't fit their budget is another. Insurers aren't raising rates to be difficult. KFF found the median change in the underlying cost of hospital stays, physician visits and prescription drugs was 10 percent for 2027. That cost has to land somewhere, and it lands on the renewal.
What I see happen in general, across any line of insurance, not just health, is people shopping for a cheaper plan with a higher deductible instead of actually reducing their risk. It feels like savings in January. It's a bigger bill the first time someone actually needs care.
The Real Number Families Are Paying Out of Pocket
The premium is only half the story. Erica Socker at Georgetown's Center on Health Insurance Reforms said workers often face deductibles and other costs north of $3,000 a year on top of the premium. So you start stacking all that up, and you have workers paying out of pocket, between the premium and what they're paying to use care, in the neighborhood of $10,000 in a lot of cases for a family, Socker said.
On the ACA exchanges, the math is worse because the enhanced subsidies that helped cover that gap expired last year after Republicans in Congress let them lapse. Justin Lo of KFF said that's pushing younger, healthier people to drop coverage, which leaves a sicker pool behind and pushes premiums up again the next year. People who are younger and possibly in better health, they may opt to drop coverage and remain uninsured, which is leading to the sicker population, Lo said.
What to Do Before Open Enrollment Opens
None of this fixes what's actually driving the cost. Katherine Hempstead at the Robert Wood Johnson Foundation said it plainly: restoring subsidies will cost less to the people buying coverage, but it's not doing anything to address how much the healthcare services cost, how much the prescription drugs cost, and that's what's really driving a lot of the affordability problems. Subsidies move who pays. They don't move the price of the hospital stay.
- Pull your current plan's renewal notice now and compare it against at least one other tier. Don't auto-renew without looking.
- If you're on an ACA plan, check your subsidy eligibility under the current rules before you assume last year's price still applies.
- If you run a small business, price out your 2027 group renewal early. Knowing the number this far ahead gives you room to adjust pay or staffing instead of reacting at the deadline.
- Watch Congress. Democrats are campaigning on restoring the enhanced ACA subsidies, and if that passes it changes the math for the 19 million people on exchange plans.