Insight
Brokers, the 2027 Renewal Math Is Already Brutal. Here Are the Two Levers That Actually Move the Number.
If you've started looking at early 2027 renewal numbers, you already know what's coming. The consultant averages are bad, but the renewals landing on your clients' desks are worse — and 2027 layers on structural pressure that the 2026 cycle didn't have.
Here's what the data says, and what we think brokers should be bringing to every renewal conversation between now and Q4.
The 2027 forecast
Mercer's framing for 2027 planning is blunt: employer health plan sponsors are already struggling with two forces that will continue to exert pressure next year — the fastest health benefits cost growth in 15 years, and a workforce burdened by financial stress. The trend line backs it up. According to Mercer's National Survey of Employer-Sponsored Health Plans, average cost per employee rose 6.0% in 2025, with 6.7% projected for 2026 — the highest in 15 years — and 2026 will be the fourth consecutive year of elevated health benefit cost growth following a decade of moderate annual increases averaging only about 3%.
Aon and PwC put the 2026 number higher. Aon's 2025 Health Survey found that the average projected cost increase across all respondents was 9.2 percent, in line with the 9 percent projected increase from Aon's Global Medical Trend Rate Report. And what your clients are actually seeing is worse than the consultant average — the New York Fed's Liberty Street Economics analysis of February 2026 regional business surveys found that businesses reported an average increase of more than 13 percent as their policies renewed.
Three things make 2027 specifically uglier than 2026:
Medicaid work requirements go live January 1, 2027. Stricter eligibility rules under the One Big Beautiful Bill will push millions off Medicaid. As Marshall+Sterling's analysis of PwC's 2026 outlook puts it, when hospitals see more uncompensated care, they seek higher reimbursement rates from employer-sponsored plans to make up the difference — and that cost shift lands directly on self-funded employers.
HR 1 marketplace changes hit in 2027 and 2028. The Commonwealth Fund's analysis notes that changes passed in H.R. 1 that will be implemented in 2027 and 2028 may create more uncertainty for marketplace insurers and cause them to further increase premium prices, which ripples back into employer plan pricing.
GLP-1 and gene therapy utilization keeps climbing. PwC's analysis identifies the specific drivers: gene and cell therapies like Lyfgenia for sickle cell disease ($3.1 million per infusion) and Elevidys for muscular dystrophy ($3.2 million) are entering mainstream use, and GLP-1 demand isn't slowing.
So the question isn't whether 2027 renewals will hurt. It's what you're going to bring to the conversation when they do.
Two levers brokers and employers can actually control
Every cost-containment tactic on the market eventually falls into one of two buckets: who's on the plan, and what the plan pays for the care that happens. Most of what we see brokers bring to renewal conversations is tactical noise underneath one of those two umbrellas. We'd argue the conversation gets sharper if you lead with the framework and then walk through the tactics underneath it.
Lever 1: Right-size who's on the plan
This is the high-cost claimant conversation, and it's the one Mercer's 2027 planning research says 90% of employers are prioritizing. It's also where the fastest hard-dollar wins live. Three tactics to bring:
Build a COBRA off-ramp. COBRA participants are the textbook adverse-selection problem — only the sickest elect it, and they continue drawing claims at 100%+ of full premium, often for 18 months. As our colleague Tom Cox laid out in COBRA Is a Known Underwriting Problem, the math is well-understood by carriers and rarely surfaced in renewal conversations. For self-funded employers, every reduction in COBRA take-rate is direct claims savings. When provides departing employees a guided path to ACA marketplace coverage, frequently at net-zero cost to the employee, which both reduces the COBRA election rate and removes the adverse-selection drag from the plan. If your client objects with “our plan is too rich, they'll always choose COBRA,” we addressed that exact pushback here. And if they currently offer a COBRA subsidy as part of severance, Your COBRA Subsidy Is Costing You Double walks through why that's typically the most expensive way to deliver the benefit.
Migrate Medicare-eligible employees and retirees off the group plan. Every Medicare-eligible employee on your client's active plan is paying group premiums for coverage they could get cheaper — and often better — through Medicare plus a supplement. The same logic applies to early retirees aging in. When offers licensed Medicare guidance so the employer can confidently offer the off-ramp without compliance exposure. We broke down the ROI math in Why Proactive Medicare Support Delivers ROI — for any client with workforce demographics skewing 55+, this is one of the highest-ROI plays available.
Run a dependent eligibility audit. Industry data consistently finds 5–8% of covered dependents are ineligible — aged-out children, ex-spouses, step-kids no longer in the household. Removing them is defensible, claims-reducing, and doesn't touch a single eligible family member. It's the lowest-friction win you can put on the renewal table.
Lever 2: Right-size what the plan pays for
Once you've optimized the population, the second lever is contract and pricing structure. Two tactics here:
Audit the PBM contract and put GLP-1 utilization management in place. Pharmacy is the fastest-growing line item, and most mid-market PBM contracts are structurally misaligned — rebate retention, spread pricing, formulary games. The Peterson-KFF Health System Tracker notes that the Consolidated Appropriations Act of 2026 mandates that drug rebates be fully passed through to the plan sponsor for Medicare and group health plans, which gives you new leverage. Push for pass-through pricing, transparent formulary, biosimilar substitution, and clear GLP-1 utilization management — prior auth, BMI thresholds, lifestyle program requirements. Pharmacy is where the math actually moves.
Steer big-ticket procedures to Centers of Excellence or high-performance networks. Musculoskeletal, oncology, cardiac, and transplant cases drive a disproportionate share of total plan spend, and price variation for the same procedure across providers in the same market routinely exceeds 300%. Mercer's preliminary 2026 survey results note that over one-third of large employers will offer some type of non-traditional plan in 2026. You can layer a COE program on top of an existing carrier — bundled payments, often with travel reimbursement and waived cost-share to incent use. Predictable cost on the cases that matter most.
The conversation in front of you
You've been having harder versions of this conversation for four years running, and 2027 is the toughest yet. Your clients are coming in with less patience for “rates are up because [pharmacy / GLP-1s / hospital consolidation]” than they had last year — they've heard it, and they're tired of it. You know all too well that renewal conversations get won or lost in the first ten minutes, and what the brokers keeping their books are bringing into that ten minutes is a framework, not a renewal letter and a sigh. Two levers. A handful of tactics. A number against each. Your clients don't need you to explain that costs are up — they need to know what you're doing about it.
_________________
If COBRA and Medicare are on your renewal list this year, we can help. When works with brokers to model the COBRA and Medicare migration savings inside your clients' specific demographics — typically in 30 minutes or less. You can run a quick estimate with our savings calculator, or schedule a working session and we'll build the renewal-ready numbers with you.
