By Stacey Pogue, Sabrina Corlette, and Karen Davenport
Open enrollment typically occurs in October or November for many of the 161 million Americans with employer-sponsored health insurance. It is an annual opportunity for workers to compare plan options and select coverage for the coming year. It is also when people learn how much more they must pay in monthly premiums and how much higher their deductible may climb. Workers should brace for bad news this open enrollment season. Employers expect health insurance costs to rise more in 2027 than they have for nearly two decades. These rising employer-sponsored insurance (ESI) costs will hit families at a time when health care affordability already ranks as a top pocketbook concern.
While issues with ESI affordability seem intractable, federal policymakers have options that could provide meaningful relief to workers struggling to afford health care and coverage for themselves and their families. This blog post reviews expected ESI cost trends for 2027 and federal policy options to address mounting affordability concerns.
Growing health care costs have squeezed workers over time
As provider prices rise, employer health plans and insurers have historically responded by shifting costs onto workers and families through higher deductibles and aggressive use of other strategies that discourage care, like prior authorization.
Workers’ deductibles have increased by more than 50% since 2015, outpacing wage growth and inflation. In 2026, the average deductible for workers with single coverage reached $1,886. Under the ACA, aggregate deductibles, coinsurance, and copayments are capped by a maximum out-of-pocket limit in most commercial market insurance plans. This cap helps protect people with significant health care needs from medical bankruptcy. However, the annual limit is so high–$10,600 for individuals and $21,200 for family coverage in 2026–that people with illnesses or injuries can still face staggering and unmanageable health care costs.
Rising deductibles and high out-of-pocket maximums saddle many people with medical debt and drive others to skip needed and preventive care.
Rising cost trends threaten to drive premiums and deductibles higher in 2027
Employer surveys and analyst projections point to a big jump in ESI costs in 2027, ranging from 9% to 11% before employers make any plan changes to manage their costs. This marks the largest annual increase in about two decades, and follows several years of elevated ESI cost growth.
Unsurprisingly, employers unable to absorb cost increases of this magnitude are planning changes to their health plans, such as scrutinizing vendors, adding value-based models, and paring back coverage of GLP-1s. Most large employers report that they will shift at least some of these cost increases to workers in 2027, through higher deductibles and other out-of-pocket costs and higher premiums.
Congressional action could improve affordability
Employer plans and insurers, on their own, have been unable to constrain the growth in health care unit prices through network negotiations with monopolistic health care systems. They also have not been able to rein in prescription drug cost growth. Congress, on the other hand, could take action to tamp down some of the most egregious underlying drivers of high ESI costs while meaningfully lowering consumers’ out-of-pocket costs and improving coverage without causing premiums to jump.
CHIR’s recent report, “A 3-Part Strategy for Better Health Insurance,” outlines a package of federal policies that could improve ESI affordability. To reduce ESI-related costs, Congress could:
1. Cap out-of-pocket costs and limit hospital prices
- Cap annual deductibles at $1,000 single/$2,000 family, and lower the annual maximum out-of-pocket limit in health plans to $4,000 single /$8,000 family. This would cut the average ESI deductible roughly in half. To prevent these steps from driving up premiums, pair lower out-of-pocket costs with hospital price caps.
- Establish a Medicare-referenced hospital price cap. On average, prices that hospitals charge to commercial insurers are more than two-and-a-half times the rates paid by Medicare. Some states, like Indiana and Vermont, are implementing limits on hospital prices pegged to a multiple of Medicare rates to produce savings that should lower health plan premiums and out-of-pocket costs.
2. Make high-value services and prescription drugs more affordable
- Require all commercial health plans to cover essential high-value services pre-deductible with $0 cost- sharing, such as a set number of annual primary care, urgent care, and behavioral health visits as well as high-value generic medications and maintenance drugs necessary to manage chronic conditions. To prevent this step from driving up premiums, pair coverage improvements with prescription drug cost containment.
- Extend Medicare prescription drug negotiation and inflation rebates to commercial plans. Federal reforms that lower prescription drug costs in Medicare could be extended to drugs purchased in the commercial market.
3. End unfair facility fees and abusive billing
- Prohibit facility fees. Hospitals that acquire physician practices can reclassify doctors’ offices as hospital outpatient departments (HOPDs) and add a separate “facility fee” that can make identical care three times more expensive. Congress could ban hospitals from billing, and commercial plans from paying, facility fees for routine office visits in on-campus or off-campus hospital outpatient settings.
- Adopt a site-neutral payment standard. Require commercial plans to reimburse outpatient services that can be safely provided in non-hospital settings at site-neutral rates.
Looking forward
The affordability-focused policies above won’t fix everything broken in health insurance. Other policies are needed to address complexity and red tape in insurance, and to hold health industry actors accountable for putting profits over patients.
Americans struggling to afford rising premiums and out-of-pocket costs are looking to the federal government for solutions. While the problems with ESI seem intractable, federal policymakers could take pragmatic steps that improve health insurance by reducing costs, complexity, and corporate abuses.
