Rising medical costs and the expiration of enhanced federal insurance subsidies are squeezing Michigan households, while small businesses face another year of higher employee benefit expenses.

LANSING — Michigan families and small businesses face another expensive year for health insurance after state regulators approved average premium increases of 14.2% for individual policies and 9.6% for small-group coverage beginning January 1, 2027.

The increases affect approximately 400,000 individual-market enrollees and 403,722 people covered by small-group plans. They do not apply to all employer-sponsored insurance or to Medicare and Medicaid coverage.

The increases follow average individual-market premium hikes of 20.2% in 2026. Compounding the two statewide averages produces a hypothetical two-year increase of 37.3%, although actual increases vary by insurer and policy.

Why are insurance costs rising so sharply?

Two separate forces are putting pressure on Michigan households: rising medical expenses that drive insurers’ premiums higher, and the expiration of enhanced federal Affordable Care Act subsidies that previously helped consumers pay those premiums.

Insurers cite higher hospital prices, greater use of medical services and increasingly expensive prescription drugs.

Blue Cross Blue Shield of Michigan anticipates medical and prescription drug costs rising approximately 10% in 2027. UnitedHealthcare cites higher hospital prices, increased medical utilization and specialty drug expenses.

The expiration of enhanced federal ACA premium tax credits at the end of 2025 has added another burden for many Michigan families.

An October analysis by the Center for Health and Research Transformation, affiliated with the University of Michigan, found that Marketplace enrollees paid approximately $1,000 more in annual premiums in 2026, on average.

Average deductibles also increased by more than $1,000 as consumers moved toward plans with greater out-of-pocket exposure.

CHRT estimated that combined annual premium payments and patient cost-sharing increased approximately $1,800 per enrollee compared with 2025.

Michigan Marketplace enrollment declined approximately 27% by February 2026 compared with a year earlier.

Those figures describe 2026 affordability changes, not additional expenses resulting from the approved 2027 rate increases.

Federal subsidies affect what eligible consumers pay, while medical expenses and other factors determine insurers’ underlying premiums. The expiration of enhanced subsidies does not, by itself, explain the entire 14.2% approved increase.

Michigan regulators approve nearly all requested increases

The Michigan Department of Insurance and Financial Services approved the statewide 14.2% individual-market increase after insurers requested an average of 14.4%.

The 9.6% small-group increase matched the statewide average requested.

DIFS reviewed 18 filings, issued 944 objections and denied none. The department says independent actuaries review filings to determine whether proposed rates are justified and sufficient to cover expected medical claims.

Selected approved individual-market increases:

Source: DIFS 2027 rate approvals.

Small businesses face difficult choices

Consider a Michigan employer with 25 workers that contributes $6,000 annually toward each employee’s health insurance.

That represents $150,000 in annual benefit expenses.

A 9.6% increase would add $14,400 annually if the employer maintained the same coverage and contribution structure.

Businesses may absorb the increase, require employees to contribute more, change insurance plans or reduce spending elsewhere.

For restaurants, retailers and professional service firms operating on narrow margins, rising benefit costs can influence hiring, wages and expansion decisions.

What Michigan consumers should do now

Open enrollment for 2027 Marketplace insurance begins November 1 and continues through January 15.

Consumers seeking coverage effective January 1 must generally select a plan by December 15.

The state encourages residents to compare monthly premiums, deductibles, copayments, prescription coverage and physician networks before choosing a plan.

Consumers can compare coverage and financial assistance at HealthCare.gov.

For Michigan families and businesses, the financial consequences are clear: Higher health insurance expenses leave less money available for household purchases, employee compensation and business investment.

COMING FRIDAY: Federal Medicaid changes and the expiration of enhanced Affordable Care Act subsidies could have far-reaching consequences for Michigan residents and hospitals. MITechNews examines the financial stakes ahead of Tuesday’s election.