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Employer Health Costs Surge: What it Means for EHTH, CNC & UNH
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Key Takeaways
eHealth says 54% of smaller employers expect 2027 premium hikes of at least 10%.
EHTH says 73% of surveyed employers are considering dropping traditional health insurance benefits in 2027.
CNC and UNH are expanding ICHRA presence as employer interest in individual coverage grows.
eHealth, Inc. (EHTH - Free Report) recently said small and mid-sized employers are facing a sharp jump in health insurance costs for 2027, pushing many to rethink traditional group coverage. Its survey of more than 500 business owners and managers found that 54% expect premium increases of at least 10%, while more than one in five face hikes of 15% or higher.
Employer Health Costs Are Heading Higher
Last month, Aon plc (AON - Free Report) projected that U.S. employer healthcare costs will rise 9.5% in 2027 before employers take steps to rein in expenses. Aon links the increase not only to higher prices but also to greater healthcare utilization and a more expensive mix of services. Marsh & McLennan Companies, Inc. (MRSH - Free Report) expects an even steeper 11% increase before cost-control measures, moderating to 8.2% after employers make planned benefit changes.
That would mark the sharpest increase in employer health benefit costs since 2003, even after cost-containment efforts. Marsh also found that 59% of employers plan benefit changes, including higher deductibles, as companies try to contain spending. It attributes the expected increase to several factors, including costly new therapies, higher provider rates, broader use of GLP-1 weight-loss drugs, AI-supported medical billing and out-of-network charges. GLP-1 drugs alone are projected to contribute roughly one percentage point to health benefit cost growth in 2027.
Why CHOICE/ICHRAs Are Gaining Attention
eHealth CEO Derrick Duke said that rising costs are making it harder for employers to use health benefits to attract and retain workers. The company sees growing interest in alternatives such as Custom Health Option and Individual Care Expense (CHOICE) Arrangements, also known as Individual Coverage Health Reimbursement Arrangements (ICHRAs), which can offer employers more cost certainty, flexibility and simpler administration.
The numbers suggest that higher premiums are starting to change how smaller employers think about providing health benefits. Among companies facing rate increases, 80% said the size of the hike surprised them. The bigger concern is that 73% are considering moving away from traditional group coverage in 2027. Another 85% worry they may be unable to afford group coverage within three years. Meanwhile, 58% are already pursuing alternatives, while awareness of CHOICE Arrangements rose to 57% from 46% a year earlier, a meaningful eleven-point increase.
What the Shift Could Mean for eHealth
For eHealth, this trend could expand the market for employer-funded individual coverage. If more small and mid-sized companies move away from fully insured group plans, demand could rise for CHOICE Arrangements and other options that eHealth can help employers and workers evaluate. That could expand lead volumes, policy enrollments and commission opportunities.
The survey also suggests that employers have reasons beyond premiums to consider alternatives: 79% view plan administration as a burden, while 72% report at least one dissatisfaction with current coverage. eHealth currently has a Zacks Rank #3 (Hold).
Health Insurers Position for ICHRA Growth
Meanwhile, health insurers such as Centene Corporation (CNC - Free Report) could also benefit as employers move toward individual coverage models. Centene says ICHRA adoption among businesses rose 34% from 2024 to 2025, signaling stronger interest in the model. Through Ambetter Health Solutions, CNC is targeting this opportunity with ICHRA-compatible plans available in 13 states in 2026. Continued adoption could help Centene attract additional members, lift premium revenues and broaden its reach in the employer-linked individual market. Centene currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings outlook also remains favorable.
The Zacks Consensus Estimate for CNC’s 2026 EPS stands at $4.89, implying a 135.1% year-over-year surge, while the 2027 estimate of $5.34 points to another 9.2% increase. Both estimates received nine upward revisions over the past 60 days and no downward revisions. CNC beat earnings estimates in each of the past four quarters, with an average surprise of 151.3%.
UnitedHealth Group Incorporated (UNH - Free Report) is also building its presence in the ICHRA market through a major expansion of UnitedHealthcare’s off-exchange individual plans, which can be paired with employer-funded reimbursements. In 2026, UnitedHealth more than quadrupled its off-exchange offerings and entered 20 additional states. The wider footprint gives employees using ICHRAs a broader set of coverage choices and could help UnitedHealthcare capture additional enrollment if adoption continues to rise. It currently has a Zacks Rank #2 (Buy).
The consensus estimates for UNH’s 2026 and 2027 EPS are $19.82 and $22.54, indicating growth of 21.2% and 13.7%, respectively. Both estimates saw six upward revisions over the past 60 days and no downward movements. UNH topped earnings estimates in each of the past four quarters, delivering an average surprise of 12.1%.
View the Zacks #1 Rank List
Image: Bigstock
Employer Health Costs Surge: What it Means for EHTH, CNC & UNH
Key Takeaways
eHealth, Inc. (EHTH - Free Report) recently said small and mid-sized employers are facing a sharp jump in health insurance costs for 2027, pushing many to rethink traditional group coverage. Its survey of more than 500 business owners and managers found that 54% expect premium increases of at least 10%, while more than one in five face hikes of 15% or higher.
Employer Health Costs Are Heading Higher
Last month, Aon plc (AON - Free Report) projected that U.S. employer healthcare costs will rise 9.5% in 2027 before employers take steps to rein in expenses. Aon links the increase not only to higher prices but also to greater healthcare utilization and a more expensive mix of services. Marsh & McLennan Companies, Inc. (MRSH - Free Report) expects an even steeper 11% increase before cost-control measures, moderating to 8.2% after employers make planned benefit changes.
That would mark the sharpest increase in employer health benefit costs since 2003, even after cost-containment efforts. Marsh also found that 59% of employers plan benefit changes, including higher deductibles, as companies try to contain spending. It attributes the expected increase to several factors, including costly new therapies, higher provider rates, broader use of GLP-1 weight-loss drugs, AI-supported medical billing and out-of-network charges. GLP-1 drugs alone are projected to contribute roughly one percentage point to health benefit cost growth in 2027.
Why CHOICE/ICHRAs Are Gaining Attention
eHealth CEO Derrick Duke said that rising costs are making it harder for employers to use health benefits to attract and retain workers. The company sees growing interest in alternatives such as Custom Health Option and Individual Care Expense (CHOICE) Arrangements, also known as Individual Coverage Health Reimbursement Arrangements (ICHRAs), which can offer employers more cost certainty, flexibility and simpler administration.
The numbers suggest that higher premiums are starting to change how smaller employers think about providing health benefits. Among companies facing rate increases, 80% said the size of the hike surprised them. The bigger concern is that 73% are considering moving away from traditional group coverage in 2027. Another 85% worry they may be unable to afford group coverage within three years. Meanwhile, 58% are already pursuing alternatives, while awareness of CHOICE Arrangements rose to 57% from 46% a year earlier, a meaningful eleven-point increase.
What the Shift Could Mean for eHealth
For eHealth, this trend could expand the market for employer-funded individual coverage. If more small and mid-sized companies move away from fully insured group plans, demand could rise for CHOICE Arrangements and other options that eHealth can help employers and workers evaluate. That could expand lead volumes, policy enrollments and commission opportunities.
The survey also suggests that employers have reasons beyond premiums to consider alternatives: 79% view plan administration as a burden, while 72% report at least one dissatisfaction with current coverage. eHealth currently has a Zacks Rank #3 (Hold).
Health Insurers Position for ICHRA Growth
Meanwhile, health insurers such as Centene Corporation (CNC - Free Report) could also benefit as employers move toward individual coverage models. Centene says ICHRA adoption among businesses rose 34% from 2024 to 2025, signaling stronger interest in the model. Through Ambetter Health Solutions, CNC is targeting this opportunity with ICHRA-compatible plans available in 13 states in 2026. Continued adoption could help Centene attract additional members, lift premium revenues and broaden its reach in the employer-linked individual market. Centene currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings outlook also remains favorable.
The Zacks Consensus Estimate for CNC’s 2026 EPS stands at $4.89, implying a 135.1% year-over-year surge, while the 2027 estimate of $5.34 points to another 9.2% increase. Both estimates received nine upward revisions over the past 60 days and no downward revisions. CNC beat earnings estimates in each of the past four quarters, with an average surprise of 151.3%.
Centene Price, Consensus and EPS Surprise
Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote
UnitedHealth Group Incorporated (UNH - Free Report) is also building its presence in the ICHRA market through a major expansion of UnitedHealthcare’s off-exchange individual plans, which can be paired with employer-funded reimbursements. In 2026, UnitedHealth more than quadrupled its off-exchange offerings and entered 20 additional states. The wider footprint gives employees using ICHRAs a broader set of coverage choices and could help UnitedHealthcare capture additional enrollment if adoption continues to rise. It currently has a Zacks Rank #2 (Buy).
The consensus estimates for UNH’s 2026 and 2027 EPS are $19.82 and $22.54, indicating growth of 21.2% and 13.7%, respectively. Both estimates saw six upward revisions over the past 60 days and no downward movements. UNH topped earnings estimates in each of the past four quarters, delivering an average surprise of 12.1%.
UnitedHealth Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote