Employers Abandon Group Insurance as Price Hikes Bite

Summary

Bloomberg's Taylor Nicole Rogers explains why more US employers are abandoning traditional group health insurance as costs near $19,000 per employee and healthy workers exit group plans. Employers are increasingly using Health Reimbursement Arrangements that require employees to buy insurance on ACA marketplaces, shifting risk and administrative burden to workers. The trend echoes the earlier pension-to-401(k) risk shift and creates headwinds for traditional group health insurance economics.

• Employers are reacting to the largest group health plan price hikes in 15 years.
• More than 20,000 companies entered Health Reimbursement Arrangements in 2026.
• Companies are spending almost $19,000 per employee on health insurance.
• Healthy workers are dropping out of group plans, worsening adverse selection.
• Some employers would rather exit the group insurance business altogether.
• Employees must use HRA stipends for insurance, mostly through ACA marketplaces.
• Marketplace plans may have higher deductibles, smaller networks, and higher costs.
• The shift resembles the move from traditional pensions to 401(k) plans.