Invest 1 publisher2 min readPublished September 14, 2026 at 1:16 PM PDT

Employers absorb 16 of every 20 dollars of a 2027 small-group rate increase

More than half of small-group insurers expect to raise rates by 10% to 20% next year, and because employers cover about 80% of the premium, the increase competes with payroll inside the same small budget.

The Investor · Invest desk

Illustration accompanying Employers absorb 16 of every 20 dollars of a 2027 small-group rate increase

What happened

Employers expect healthcare costs to rise nearly 10% on average in 2027, and Bloomberg Opinion's Lisa Jarvis writes that the figure could be twice as high for small firms.
KFF's analysis of the small-group market, which typically covers companies with under 50 employees, found more than half of insurers expect to raise rates by between 10% and 20%.
About 20,000 companies opted for Health Reimbursement Arrangements in 2026, a 53% increase over the prior year, according to Bloomberg's reporting.
A Marsh survey found that two-thirds of large businesses will ask workers to pay a greater share of their monthly premiums in 2027.

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Why it matters

cost Part of the 2027 increase gets paid in raises and hires that never happen, because coverage competes with payroll and new investment inside one small budget.
decision An employer that drops coverage trades a premium for turnover: 85% of insured workers surveyed said they would leave a job that ended the benefit.
exposure Each firm that switches to a fixed allowance moves its workers into an individual market where premiums have already spiked after the Biden-era ACA subsidies lapsed.
constraint The same rate increase binds harder under 50 employees, since bigger employers can negotiate, switch plan options, or trim family eligibility and GLP-1 coverage to hold spend down.

Employers pay about 80% of the premium ^[2], and that split is what turns an insurer's rate request into a budget decision. Push a 20% increase through it. Per 100 dollars of premium the employer's 80 becomes 96 while the worker's 20 becomes 24, so 16 of the 20 extra dollars land on the firm ^[15].

The move to Health Reimbursement Arrangements is an attempt to cap that number: workers get a set amount of money and buy their own insurance ^[11]. Back out the 53% growth and about 13,100 companies were using the arrangement in 2025, which puts roughly 6,900 switches in a single year ^[16].

Healthcare has not run double-digit inflation for 20 years, and coverage was comparatively cheap the last time it did ^[4]. Ellen Kelsay, president and CEO of Business Group on Health, which surveys employers about their benefits every year ^[6], said in Lisa Jarvis's Bloomberg Opinion column ^[18], "People's backs are up against a wall to a degree that they haven't been before" ^[5].

The slower version of this is already in the data on who offers coverage at all. Roughly 80% of companies with under 200 workers offered health benefits through the aughts and 59% did in 2025, a fall of 21 percentage points, or about one in four of the firms in that band that used to offer benefits ^[17]. One caution about stacking that series against the 2027 numbers: it runs up to 200 employees, while the small-group market KFF analysed is typically under 50 ^[3]^[7].

Two things could make the capital-allocation framing wrong. The 10% to 20% figure is what insurers expect to charge, not what firms end up paying after shopping the small-group market ^[3]. And employers have a second lever, one Marsh's survey shows large businesses already pulling, which is to move more of the monthly premium onto workers ^[13]; pull it hard enough and the firm's own outlay rises by less than the rate does, and the increase lands on paychecks instead of hiring plans.

In my view the switch to fixed allowances keeps compounding, because those 6,900 companies moved before the 2027 rate requests were on the table ^[16]^[3].

What to watch

Realised 2027 small-group renewal rates against the 10% to 20% insurers told KFF they expect to charge.
Whether KFF's next employer survey puts the offer rate for firms under 200 workers below 59%.
Whether HRA adoption keeps growing above 50% a year once 2027 individual-market premiums are quoted.

Claim ledger

Ranked by verification strength, evidence, and original report placement.

[2]
Employers typically foot around 80% of the health plan premium and must decide each year how much of a cost increase to absorb and how much to ask employees to shoulder.
ReportedSupportedView cited source
[3]
Over half of small-group insurers, which typically offer plans for companies with under 50 employees, expect to raise rates between 10% and 20%, according to a recent analysis by health policy researchers at KFF.
ReportedSupportedSource: KFF analysis, cited by Bloomberg OpinionView cited source
[5]
"People's backs are up against a wall to a degree that they haven't been before."
ReportedSupportedSource: Ellen Kelsay, president and CEO of Business Group on HealthView cited source
[6]
Ellen Kelsay is president and CEO of Business Group on Health, which each year surveys employers about healthcare benefits.
ReportedSupportedView cited source
[7]
Throughout the aughts, roughly 80% of companies with under 200 workers offered health benefits; by 2025 that had dropped to 59%, according to KFF's annual employer health benefits survey.
ReportedSupportedSource: KFF annual employer health benefits surveyView cited source
[10]
Some 20,000 companies opted for Health Reimbursement Arrangements in 2026, an increase of 53% over the prior year, as Bloomberg recently reported.
ReportedSupportedSource: Bloomberg, cited in the columnView cited source
[11]
Under a Health Reimbursement Arrangement, an employer drops the traditional plan and workers receive a set amount of money to buy their own insurance.
ReportedSupportedView cited source
[13]
A survey by Marsh found that two-thirds of large businesses will ask workers to pay a greater share of their monthly premiums in 2027.
ReportedSupportedSource: Marsh survey, cited in the columnView cited source
[18]
The column is by Lisa Jarvis of Bloomberg Opinion, distributed by TNS.
ReportedSupportedView cited source
[15]
If the employer's 80% share of the premium holds, a 20% rate increase takes the employer's outlay from 80 to 96 per 100 dollars of prior premium and the worker's from 20 to 24, so 16 of every 20 dollars of increase falls on the employer.
DerivedSupported1 source— sign in to open
[16]
A 53% increase to about 20,000 HRA adopters in 2026 implies roughly 13,100 companies in 2025 and about 6,900 additional companies switching in a year.
DerivedSupported1 source— sign in to open
[17]
The fall from roughly 80% to 59% in the share of firms under 200 workers offering health benefits is 21 percentage points, about one in four of the firms in that band that once offered coverage.
DerivedSupported1 source— sign in to open
[1]
Survey after survey shows that employers expect healthcare costs to rise nearly 10% on average in 2027, a figure that could be twice as high for small firms.
ReportedInsufficientSource: Lisa Jarvis, Bloomberg OpinionView cited source
[4]
The healthcare industry has not seen double-digit inflation in 20 years, and coverage was comparatively cheap back then.
ReportedInsufficientView cited source
[8]
One recent survey of people with employer-sponsored insurance found that 96% considered it important to their household's financial security, and 85% said they would leave their job if their employer stopped offering the benefit.
ReportedInsufficientView cited source
[9]
Small business owners who want to offer coverage may have to cut salaries or forgo new hires or investments to do it.
ReportedInsufficientView cited source
[12]
Republicans' refusal to renew Biden-era subsidies that made Affordable Care Act plans more accessible has caused premiums to spike in many parts of the country, a situation the column says will worsen in 2027.
ReportedInsufficientView cited source
[14]
Bigger companies have more negotiating power and alternative plan options, and more room to save through strategies such as limiting eligibility for family members and cutting back benefits including GLP-1 obesity medicines.
ReportedInsufficientView cited source

Sources

Publishers with included, body-backed reporting in this cluster.

cpapracticeadvisor.com
1 article · September 14, 2026
Column: Healthcare Costs Have Small Businesses in an Impossible Bind

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Clarity analysis

How the coverage leans and what the record actually supports. Read the methodology

Perspective Coverage

How much of the coverage speaks to builders, operators and investors. It measures emphasis, not whether the story is right.

There is one usable signal here for a builder: about 20,000 employers were on reimbursement arrangements in 2026, up from roughly 13,100 the year before. That is a market forming for tools that hand a worker a fixed contribution and let them shop for a plan. Jarvis spends two sentences on how the arrangements work and moves on, so nothing in the column describes how those employers handle plan selection, eligibility or reconciliation. The column's focus stays on the budget shift, leaving the systems that would run it undescribed.

Reality

Evidence, adoption, hype gap, incentives and confidence, each read independently from the current record on the scale shown beneath it. How these are measured.

Evidence45

0100

Everything arrives secondhand

The best-sourced number is KFF's finding that over half of small-group insurers want 10 to 20% more, and even that is summarised rather than linked. The 20,000 reimbursement arrangements come from Bloomberg's own earlier reporting, the two-thirds premium shift from a Marsh survey, the 59% offer rate from KFF's annual survey. Two of the most quotable figures, the near-10% average for 2027 and the 85% who say they would quit, are credited to unnamed surveys. One person speaks on the record in the whole piece.

Adoption60

0100

Employers have already moved

Two of the figures count behaviour rather than intent. Small employers dropped coverage at scale over two decades, from roughly 80% of firms under 200 workers to 59% by 2025, and about 6,900 more companies switched to reimbursement arrangements in a single year. The 2027 items are still forward-looking: insurer expectations in the small-group market and a survey of what large employers say they will do at renewal.

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