This reflects my mid-year perspective on the market, drawing on carrier filings, earnings data, and the structural trends that are increasingly defining the future landscape.
The headline story across the employer-sponsored health insurance market in 2026 is one of mounting pressure. Medical cost trends continue to accelerate, driving some of the highest renewal increases seen in years across fully insured, level-funded, self-funded, and individual coverage markets.
At the same time, carrier profitability remains uneven, regional plans are reevaluating their market participation, and employers are facing growing challenges in balancing affordability with the need to offer competitive benefits. Rising utilization, escalating pharmaceutical costs, provider consolidation, and ongoing reimbursement pressures are creating a difficult environment for every stakeholder in the healthcare ecosystem.
Carriers, providers, and policymakers are experimenting with new reimbursement models, narrower networks, value-based arrangements, and consumer-driven approaches to care delivery. While these shifts create near-term disruption, they also accelerate the structural changes that have long supported the case for models like ICHRA.
The result is a market that is becoming increasingly receptive to individualized benefits strategies. If current trends persist, 2027 will be the strongest growth environment the ICHRA industry has experienced to date.
Macro conditions: A convergence worth pricing in
The goal of this brief is to provide a forward-looking projection based on the current carrier, policy, pricing, network, and operational capability landscape across the ACA, employer-sponsored, and ICHRA markets.
Drawing on our first review of preliminary 2027 rate filings, carrier financial performance, medical loss ratio trends, earnings commentary, and other market indicators, we believe average ACA premium increases in 2027 will be meaningfully lower than those experienced in 2026.
Following our initial analysis of available filings and supporting market data, we expect average rate increases to land in the high single digits to mid-teens across most markets. We also anticipate a handful of states could see low single-digit increases, reflecting stronger carrier performance, improving market stability, and increasingly competitive dynamics in select regions.
As with any rating cycle, there are notable outliers driven by localized market dynamics, competitive positioning, and carrier-specific performance. However, the broader trend points to a more moderate pricing environment than group and a meaningful improvement relative to the elevated increases seen in 2026.
In Washington, for example, we are seeing a meaningful bifurcation between on-exchange and off-exchange products. Preliminary off-exchange filings are averaging approximately 13.9% on a weighted basis, while on-exchange products are trending above 25%. New York is also showing some volatility, driven in part by deteriorating benefit-cost ratios among carriers.
Despite continued pressure within the individual market, early forecasts across the small group, middle market, and self-funded segments point to the highest medical cost trends employers have faced in years.
If those projections materialize, the market could create one of the most favorable growth environments the ICHRA industry has experienced to date. The combination of moderating individual market rate increases and accelerating employer-sponsored healthcare costs could reasonably drive 2–3x industry growth in 2027 alone.
Improving ACA morbidity relative to what carriers originally projected in 1/1/26 filings
Better carrier financial performance across individual market products with roughly 3 in 4 carriers projecting MLR improvements.
Continued migration away from broad PPO utilization into more managed HMO and EPO structures with stronger cost containment than group market
Accelerating off-exchange product investment and carrier sophistication
Growing employer fatigue around traditional PPO renewal volatility and contribution increases
Improving operational and consumer navigation capabilities across digital enrollment and guidance platforms
At the same time, the broader healthcare market continues undergoing structural repositioning that increasingly favors individualized and defined contribution-oriented models.
Carrier repositioning
The recent wave of carrier repositioning across the healthcare market is creating a meaningful acceleration point for ICHRA momentum across both the SMB and middle market segments.
Some of the recent carrier exits and strategic pullbacks are less about weakness in the ACA market itself and more about core business alignment and capital allocation decisions. Similar to Aetna, Cigna has been shifting toward a less regulated business model, leaning further into level-funded and ASO products while reducing exposure to highly regulated businesses. The company has exited Medicare Advantage and now only offers 2–50 fully insured products in a limited number of states. They also have a new CEO, formerly the COO & CFO, who appears focused on consolidating strategy, improving operating discipline, and repositioning the portfolio amid relatively flat stock performance.
I've been asked specifically about developments in Oregon, particularly regarding PacificSource and Providence Health Plan, given that it's my home state and has some unique market dynamics.
My perspective is that these exits are less about the ACA marketplace itself and more about the broader deterioration of Oregon's commercial insurance market following the passage of Oregon's Senate Bill 1067.
SB 1067 established reimbursement caps for hospital services provided to members of the state's public employee and educator health plans, limiting payments to 200% of Medicare rates for in-network hospitals and 185% for out-of-network hospitals. The policy was designed to reduce healthcare spending for the state's employee benefit programs and has generated meaningful savings for taxpayers.
However, many market participants argue that the law created significant cost-shifting pressure across the broader commercial market. As reimbursement for public employees declined, hospitals sought to recover lost revenue through higher negotiated rates in the fully insured commercial market. Over the past five years, those dynamics have placed increasing pressure on carriers—particularly smaller and less well-capitalized regional plans.
Whether you characterize it as cost shifting or market rebalancing, the result has been substantial upward pressure on commercial hospital reimbursement rates, contributing to margin compression and making it increasingly difficult for some carriers to compete effectively in Oregon.
Oregon is also not alone in exploring reimbursement caps and public-option-style approaches. States such as Washington, Montana, and Indiana have implemented alternative models designed to constrain public-sector healthcare spending.
While these efforts can generate meaningful savings for public purchasers, policymakers should carefully monitor their broader market effects. Hospitals already face significant reimbursement pressure from Medicare and Medicaid, which often pay below the cost of care. Additional constraints on public-sector reimbursement may increase the financial incentive to seek higher rates from commercial payers.
As a result, carrier exits in Oregon should be viewed through the lens of broader market economics rather than as a referendum on the ACA exchange itself. The underlying issue is the long-term sustainability of commercial reimbursement levels and the ability of health plans to absorb continued provider cost inflation in an increasingly concentrated healthcare market.
Off-exchange momentum is no longer speculative
At the same time, what much of the industry still underestimates is the acceleration of off-exchange plan growth and the level of carrier commitment building behind the individual market. That momentum is beginning to show up more clearly in carrier financial performance, recent earnings commentary, and emerging product strategy.
As of June 16, 2026, Centene is up roughly 46.94% year to date and recently reported improving momentum in its ACA business following prior challenges. Oscar Health is up roughly 90% on a year to date basis posting a significant earnings beat on May 6. UnitedHealth Group has also rebounded materially over the last month as operational performance improves.
An equally important dynamic for 2027 is the increasingly aggressive posture being taken by Blue plans across the ICHRA ecosystem.
Historically, many Blue plans viewed ICHRA as a niche segment or defensive offering. That mindset has shifted materially. Across the country, Blues organizations are making significant investments in individual market capabilities, off-exchange distribution, broker enablement, and digital enrollment experiences designed specifically to capture ICHRA growth.
Several factors are driving this change:
Local Blue plans often maintain the strongest provider networks, deepest market share, and highest brand recognition within their respective geographies, creating a natural advantage as employers move toward defined contribution models.
ICHRA aligns closely with the Blues' historical strengths in localized care management, value-based contracting, and narrow-network product design.
Off-exchange growth provides carriers with greater flexibility around pricing, product configuration, member engagement, and distribution strategy than traditional group markets.
As group medical trends remain elevated, Blue plans increasingly view ICHRA as both a defensive strategy to retain employer relationships and an offensive growth opportunity to expand membership in the individual market.
At Thatch, we are seeing this firsthand. Conversations that were exploratory twelve months ago have evolved into active discussions around portfolio expansion, co-marketing initiatives, enrollment experiences, data integration, and long-term product strategy.
While some incumbents are pulling back or repositioning, this should not be interpreted as weakness in the market itself. Instead, it reflects a shift in where carriers increasingly believe long-term value will be created. The individual market, particularly off-exchange, is gaining traction as economics improve, consumer shopping behavior evolves, and carriers gain more flexibility around product design, network strategy, and localized market positioning.
What we are seeing at Thatch reinforces this directly. We are currently in discussions with several carriers around their 2027 individual market portfolio expansions, and we are actively counseling new entrants evaluating the space. The pipeline activity alone signals a level of institutional commitment that was not present twelve months ago.
The 4/1 small group filings
The 2026 4/1 small group filings further reinforce the growing competitive opportunity for ICHRA, particularly within the 2–50 employer segment where pricing pressure continues to accelerate. Across 26 states and 67 carrier filings, the data shows meaningful premium increases, broad market fragmentation, and continued signs of carrier repricing and repositioning.
Most notably, there appears to be significant pressure within UnitedHealthcare's 2–50 fully insured block. UHC filings across multiple states routinely approached or exceeded 20% increases. This aligns with broader industry trends where national carriers are increasingly steering employers toward level-funded and alternative risk-based products while aggressively repricing traditional fully insured SMB business.
However, this dynamic is not isolated to SMB. The middle market increasingly faces a much more structural problem tied to PPO economics themselves.
The PPO model is becoming structurally unsustainable
Broad PPO networks continue to subsidize the broader healthcare system through materially higher commercial reimbursement rates. As hospital systems seek to offset ongoing pressure from public program reimbursement, employer-sponsored coverage increasingly serves as the primary mechanism absorbing those costs.
The pressures are mounting. Specialty drug utilization continues to accelerate, GLP-1 adoption is expanding rapidly, behavioral health demand remains elevated, provider labor costs persist above historical norms, and consolidation among health systems continues to strengthen provider negotiating leverage.
The result is a sustained period of elevated medical cost inflation across employer-sponsored coverage.
Recent data from PwC's Behind the Numbers report projects group medical trend to reach 9.0% in 2027, while revising its 2026 forecast upward from 8.5% to 9.0%. Individual market trend is projected at 8.5% in both 2026 and 2027. PwC notes that 2027 would represent the highest employer medical cost trend in 17 years.
This pressure is also showing up in the stop-loss market. A June 2026 BenefitsPRO report citing a new Tokio Marine HCC stop-loss experience analysis found that stop-loss insurance claims increased materially more than carriers expected in 2025, with analysts noting that quotes for 2027 stop-loss renewals could be comparable to elevated 2026 levels. When both the medical trend data and the stop-loss experience are signaling the same direction, it is difficult to argue the underlying cost structure is stabilizing.
These projections reinforce what employers are already experiencing: healthcare costs are no longer normalizing. Instead, the market appears to be entering a new baseline of persistently elevated trend.
As middle market employers continue facing elevated PPO renewals, many are increasingly being forced to shift costs back to employees through higher payroll contributions, narrower networks, higher deductibles, stricter utilization management, and plan design changes. In many cases, employers are effectively paying premium PPO pricing while employees increasingly experience HMO or managed care-style restrictions underneath the surface.
This is one of the most important underappreciated dynamics driving long-term ICHRA momentum. The traditional middle market PPO model is becoming structurally harder to sustain as commercial reimbursement continues subsidizing broader healthcare system economics.The data, from multiple directions, suggests that pressure is accelerating, not plateauing.
The individual market is decoupling
At the same time, the individual market is evolving in the opposite direction.
Consumers are increasingly selecting HMO and EPO products with tighter cost containment, narrower local networks, integrated delivery systems, and more managed utilization models. Carriers are becoming significantly more sophisticated around localized network strategy, steerage economics, and off-exchange product development.
Collectively, these dynamics should materially improve carrier margins and lower underlying claims pressure entering the 2027 filing cycle. If these trends continue, there is a reasonable scenario where 2027 ACA rate increases compress into the high single digits or potentially lower across portions of the market.
Lower individual market trends combined with continued pressure in both the SMB and middle market PPO segments would likely create one of the strongest economic selling environments the ICHRA industry has experienced to date.
2028 and the regulatory trajectory
At the same time, the market is now beginning to shift toward an even more important long-term discussion around 2028 and the evolving CMS regulatory framework.
The 2027 CMS NBPP Final Rule signals that the government continues pushing healthcare toward consumer-driven purchasing behavior, localized networks, transparency, individualized plan selection, and digitally guided enrollment experiences. Importantly, the regulatory scrutiny is less about off-exchange products directly and much more focused on digital brokers, enrollment platforms, consent workflows, eligibility verification, marketing oversight, and program integrity.
This raises the operational bar significantly for the industry but also strengthens the long-term positioning of compliance-first technology platforms that can embed guidance, auditability, consent management, and structured enrollment infrastructure directly into the user experience.
Risks worth naming
At the same time, there are meaningful strategic risks emerging alongside this opportunity.
Many of these new models remain heavily rule-driven, much like ICHRA itself. Future legislative or regulatory shifts could materially alter the market structure over time. In addition, the rise of transparency-driven products, reference-based pricing models, hybrid network strategies, and consumer-directed products within the traditional group market could temporarily slow pure ICHRA migration as employers pursue lower-cost alternatives without fully transitioning into individualized benefits.
Even with those risks, the broader direction of the market continues moving toward greater individual market relevance, localized value creation, off-exchange innovation, guidance-led experiences, and compliance-driven digital infrastructure.
Where this leaves us
The market is becoming significantly more personalized, digitally guided, and defined contribution-oriented. Complexity is increasing rapidly, but that complexity creates enormous opportunities for organizations that can simplify decision making, maintain trust, and help consumers confidently navigate healthcare in a compliant and auditable way.
The conditions that produce a genuine market inflection do not announce themselves. They accumulate. What I am tracking in the carrier data, the filings, and the earnings commentary right now looks less like noise and more like structure. The organizations that are positioning into this shift, and not waiting for confirmation, are going to have a meaningful advantage when 2027 rate filings land.
Gary Daniels is Chief Growth Officer at Thatch, where he leads growth and carrier strategy. A former UnitedHealthcare CEO and advisor to healthcare startups, Gary believes the U.S. consumer is the most powerful purchaser on the planet, and has yet to be unleashed on healthcare.
