PwC pegs the 2027 individual-market medical trend at 8.5% (PwC, 2026). KFF's newly completed 50-state count of 276 insurer filings puts the median proposed 2027 marketplace increase at 15% (KFF, August 2026).

The 6.5-point gap is not noise. Carriers are now filing it as a distinct, quantified subsidy-cliff morbidity line, separate from trend, and in a handful of memoranda they have put a number on it.

Key Takeaways

  • 15% median proposed 2027 increase across 276 insurer filings in all 50 states, down from the 20% median 2026 settled at after state review, but still the second-highest requested change since 2018.
  • 6.5 percentage points separate that median from PwC's 8.5% individual-market trend, and CBO independently modeled a 5.7% subsidy-expiration premium effect before a single 2027 rate was filed.
  • 3.3 of Fallon's 25.7 points and a full 5 points of ConnectiCare's Connecticut filing are attributed explicitly to expired enhanced premium tax credits. MVP filed the effect as $48 per member per month of claims.
  • 6.5% in Vermont against 22.9% in Alaska: the national median is the center of a distribution whose spread tracks reinsurance programs, Medicaid expansion status and carrier count.
  • 5.7 points in 2027, 9.0 in 2028, 3.3 in 2029 is CBO's modeled path, so the filed load is a point on a rising curve rather than a one-time corrective reset.

Decomposing the Filed Median

KFF's August 3 update extended its rate-filing review to all 50 states and the District of Columbia, finding a median proposed increase of 15% across 276 insurers for 2027. That follows a median proposed increase of 18% for 2026, which settled at a final median of 20% after state rate review, the highest in nearly a decade. A 15% median is a step down, and still the second-highest requested change since 2018.

Set against PwC's 8.5% trend, roughly 6.5 percentage points of the national median are unexplained by the cost of care. That residual blends the subsidy-cliff morbidity effect, market-wide adjustments for risk-adjustment transfers and exchange user fees, and in some states the cost-sharing reduction loading now separately documented in the actuarial memorandum.

The morbidity piece is the one with third-party corroboration. CBO models 2027 gross benchmark premiums as 5.7% lower had enhanced premium tax credits been extended, widening to 9.0% in 2028 before narrowing to 3.3% in 2029 as the market re-stabilizes around a smaller, sicker base (CBO, 2025). That estimate was built before a single 2027 rate was filed, and it lands within a point of the residual implied by KFF's median minus PwC's trend.

StateProposed 2027 Increase
Vermont6.5%
Iowa6.7%
Utah6.8%
Rhode Island20.1%
Georgia20.7%
New York20.7%
Washington22.4%
Alaska22.9%

The median also describes the center of a wide distribution. Vermont's filed statewide average of 6.5% sits closest to underlying trend; Alaska reached 22.9% and Washington 22.4%, with Georgia, New York and Rhode Island in the 20% to 21% range (healthinsurance.org, July 2026). States with their own reinsurance programs or subsidy wraps dampen the net-premium shock. States that never expanded Medicaid run marketplaces where the cliff is a binary affordability cutoff. Thin, low-competition markets move on one carrier's decision.

Where the Morbidity Load Sits in the Rate Build

Enhanced premium tax credits removed the income cap on subsidy eligibility and cut required contributions across every income band. Their expiration at the end of 2025 restored the pre-2021 structure, which raises net premiums most sharply near or above 400% of the federal poverty level and reintroduces a hard cliff there. Twenty-two million of the roughly 24 million marketplace enrollees in 2025 held a premium tax credit, and KFF estimated a subsidized enrollee could face a net premium increase of about 114% (KFF, October 2025).

A move that size does not land uniformly. Enrollees with lower expected claims are more price-elastic and disproportionately likely to drop coverage; those managing chronic conditions absorb the increase. The pool skews sicker purely as a function of who left, with no change in morbidity inside either group.

Three carriers quantified that separately rather than folding it into trend. Fallon Community Health Plan reported that "3.3 percentage points of its 25.7% proposed increase is due to morbidity impacts from policy changes, including expired ePTCs" (Georgetown CHIR, June 2026). ConnectiCare Benefits attributed a full 5 percentage points of its Connecticut filing to the same expiration. MVP Health Plan in Vermont filed it as a claims figure instead: an additional $48 per member per month.

Where that load sits in the Unified Rate Review Template decides how it behaves. A carrier projects allowed claims per member per month, applies trend, then layers market-wide adjustments for risk-adjustment transfer, exchange user fee and CSR reconciliation to reach the index rate. Only then do plan-level factors apply.

A morbidity load filed the way Fallon and ConnectiCare structured theirs sits inside the allowed-claims projection, not the market-wide adjustment. It therefore compounds with trend rather than acting as a fixed dollar add-on, which is why a carrier that under-projects morbidity in the base claims estimate cannot correct downstream. The 2027 user-fee reduction pulls the other way in that market-wide step, and explains part of any gap between a 15%-range headline and a smaller net change on a specific plan.

A Multi-Year Path, and an Assumption That Has Already Moved Once

CBO's own three-year shape argues the effect does not resolve in one pricing cycle: 5.7 points in 2027, widening to 9.0 in 2028, narrowing to 3.3 in 2029. The compounding mechanism behind the widening middle year is that healthier enrollees who exit before submitting a claim are invisible to the risk-adjustment transfer formula, which recognizes cost only through diagnosis codes generated by claims.

Each year the formula recalibrates to a prior-year pool already worse than its coefficients assume, so each shortfall layers rather than resets. Wakely's analysis of 2026 first-month enrollment found paid stayers carrying 10.2 percentage points higher morbidity than enrollees who never paid a first premium, implying a 2.9% to 6.5% pool-level shift for 2027 assumptions. That range brackets both the CBO estimate and the Fallon and ConnectiCare filings from independent directions.

So a 2027 filing treating this year's morbidity assumption as the ceiling is pricing against the prior cycle's dynamic rather than the one both the macro model and the claims data describe. The largest single-year effect sits in 2028 under current law.

The assumption is also less fixed than a filed rate implies. Every 2027 filing locked its load on the premise that enhanced credits stay expired for the full plan year, and that premise has already proven unstable once: the credits were extended repeatedly on short timelines before the 2025 lapse, and further bills remained active in Congress as 2027 filings were finalized. A late extension would leave carriers holding a load priced for a sicker pool that only partly materializes, and states differ on whether any mid-year rate correction is permitted at all.

Further Reading

Sources