KFF and Others Forecast Rising Health Care Costs in 2027
According to a new analysis published in August by KFF, small businesses could see a double-digit increase in health costs in 2027. KFF’s forecast is based on preliminary rate filings by nearly 300 insurers offering small group coverage. Most (nearly 60%) of carriers are increasing rates between 10 and 20%. The median premium increase is 14% for 2027.
What’s driving the increase? Insurers say it’s rising prices for treatment costs (e.g., physicians, hospitals, and prescription drugs) and greater utilization. Other factors include lower enrollment in small group plans, employers moving away from offering group health coverage, dropping dependent coverage, and employer shifts to alternative coverage like self-insurance.
High-cost specialty drugs were noted by some insurers as part of their justification for raising premiums. Most did not cite specific drugs, but a few mentioned GLP-1s, which are used to treat Type 2 diabetes and obesity. Increasingly these drugs are also being used for chronic conditions like heart disease, kidney and liver disease, and sleep apnea. Researchers are studying the potential use of GLP-1s to treat addictions to alcohol and nicotine.
Findings Similar for Others
Earlier this month, Fierce Healthcare highlighted findings in a recent Mercer/Marsh study projecting an 8.2% increase in health care costs for 2027. This would mark the fifth year of increasing costs – and the highest in five years. Marsh says employers are anticipating an 11% increase in plan premium costs if they do not take action to mitigate spiraling premium growth.
Meanwhile a survey from WTW (formerly Willis Towers Watson) is forecasting a bigger bump – a whopping 11.1% -- for health care costs in 2027.
What is obvious is that costs are on the rise. You may need to work longer with your clients to help them find the right balance between costs and employee demands.