🔒As CT regulators weigh double-digit rate hikes, employer health benefit costs projected to rise 8.2% in 2027

Employer-sponsored health benefit costs are projected to increase an average of 8.2% per employee in 2027, the largest annual jump in more than two decades, according to preliminary survey results released by insurance brokerage and benefits consulting firm Marsh.

The estimate, based on responses from more than 1,800 U.S. employers, accounts for changes companies plan to make to reduce expenses. Without those measures, employers expect costs to rise an average of 11%.

The projected increase would follow a 6.7% rise in 2026 and mark the fifth consecutive year of elevated cost growth. Marsh said it would be the largest annual increase since 2003.

The national forecast comes as Connecticut insurers seek double-digit premium increases for most individual and small-group health plans next year.

Insurers have requested an average increase of 17.8% in Connecticut’s small-group market, which covers employers with 50 or fewer workers. Proposed increases range from 11% to 23.3%, depending on the plan.

Insurers are seeking an average increase of 16.2% in the individual market, with proposed changes ranging from a 3.4% decrease to a 25.2% increase. The individual and small-group filings affect plans covering about 220,000 Connecticut residents.

The Connecticut Insurance Department recently held a public hearing on the proposed rates and expects to issue its final decisions this month. The requested increases are subject to actuarial review and may not be approved in full.

Connecticut insurers have attributed their rate increase requests to many of the same pressures identified in the Marsh survey, including rising medical and prescription drug expenses, increased demand for care and worsening claims experience. Individual-market insurers have also cited the anticipated expiration of enhanced federal premium subsidies.

Marsh identified growing use of GLP-1 weight-loss drugs as a significant national cost driver, estimating that the medications account for about 1 percentage point of the projected increase. Other factors include higher prices for medical treatments and larger-than-expected payments to out-of-network providers under the federal No Surprises Act.

The firm also cited increased adoption of artificial intelligence-enabled billing software that helps healthcare providers submit more claims and bill for higher levels of service.

Employees are likely to shoulder part of the increase. Fifty-nine percent of employers responding to the Marsh survey said they plan to make cost-cutting changes to their health plans for 2027, including higher deductibles and other changes that could increase workers’ out-of-pocket expenses.

A separate Marsh survey found that about two-thirds of employers with at least 500 workers expect to increase employees’ share of premium costs next year. Other companies are considering lower-cost plan designs that encourage workers to use selected healthcare providers.

The preliminary national findings include responses collected through Aug. 10. Marsh plans to release its final survey results later this year.