Health insurers file proposed rates with state regulators every year, and those filings are the earliest reliable signal of what employers will pay when their plans renew. The 2027 filings are in, and the picture for small businesses is not a comfortable one.
Across 295 small group insurers in all 50 states and the District of Columbia, the median proposed premium increase for 2027 is 14 percent. Most carriers, roughly 59 percent of them, are proposing increases between 10 and 20 percent. The middle of the range runs from about 10 percent at the 25th percentile to about 18 percent at the 75th percentile. These are proposed numbers and can move during state review, but they set the expectation for renewal season.
What carriers say is driving the increase
The single largest factor is the same one that shows up every year: the underlying cost of care. The median carrier assumption for medical trend, which combines the price of services and how often members use them, is about 10.8 percent for 2027. Hospital stays, physician visits, and prescriptions all continue to cost more, and utilization has climbed alongside price.
Specialty drugs are the second recurring theme. Carriers repeatedly point to new high cost biologics and other emerging therapies that have no generic or lower cost substitute. In one carrier’s filing, specialty medications were used by roughly 2 percent of members but accounted for more than half of total drug spend. That concentration is what makes these drugs so difficult to absorb.
GLP-1 medications get their own line in many filings. Some carriers have dropped coverage for weight loss use and still report rising cost, because utilization for diabetes and other approved conditions keeps growing. Carriers that continue to cover these drugs for weight management are pricing in a direct premium impact, in at least one case an explicit 2.4 percent increase to the index rate.
Behavioral health is a newer entry on the list. Mental health and substance use spending has grown quickly, in one carrier’s experience by more than 20 percent annually over the past two years, driven by both higher utilization and higher provider reimbursement.
The risk pool problem
The part of these filings that deserves the most attention from small employers has less to do with medical costs and more to do with who is left in the fully insured pool.
Enrollment in fully insured small group coverage has been shrinking for years. The market has gone from roughly 17 million covered lives in 2013 to about 10 million in 2024. Over that same stretch, the share of small business employees with coverage of some kind has held fairly steady. Employees are not losing coverage. Employers are moving them out of fully insured plans and into self funded and level funded arrangements.
Carriers say this directly in their filings. Groups with healthier employees qualify for level funded pricing and leave. What remains is an older and sicker pool, and rates get built on that experience. One New York carrier reported a 33 percent drop in small group enrollment over twelve months and added a risk adjustment to account for it. A Massachusetts carrier reported level funded penetration rising from 2 percent in 2021 to more than 11 percent in 2025.
What this means for your renewal
Level funded plans are worth evaluating on the merits. They can lower fixed cost, return surplus when claims run low, and offer more flexibility in plan design. They are also medically underwritten, which is exactly why healthier groups do well with them.
The tradeoffs are real. These arrangements generally sit outside ACA small group rating and benefit rules. They are not guaranteed renewable, so a bad claims year can produce a steep renewal or no renewal offer at all. Essential health benefit and state mandate protections may not apply.
The practical takeaway for 2027 is this: assume a double digit increase on a fully insured renewal, start the review early, and price both funding structures side by side rather than defaulting to whichever one you are in now. Groups that only look at fully insured options are leaving money on the table, and groups that jump to level funding without understanding the renewal risk are trading a known cost for an unknown one.