At the end of 2025, there was mass speculation about the impact of changes to the Affordable Care Act (ACA). Many people expected drastic ACA enrollment declines in response to subsidy expiration and premium increases. The final numbers aren’t out yet, but with the information we have now, the declines were less than projected. All the while, medical inflation spurred challenges for the employer group health insurance market and ICHRA growth tripled.
In this article, we focus on the landscape of health insurance with updates on ACA Marketplace enrollment, the impact of medical inflation on group health insurance, and how employers are responding via HRA enrollment.
ACA changes
Last fall, experts projected 2026 ACA enrollment to decline anywhere between 9%¹ 30%². The reality turned out to be different. This year’s ACA enrollment dropped by 5%³. In addition to the decline being less than expected, nine states and Washington, D.C. actually saw an increase in ACA enrollment; Texas led that charge with more than 200,000 additional people signing up for coverage in 2026 compared to 2025.³
Those tax credit expirations and premium increases were an ACA stress test. They gave us valuable insight into the stability of the Affordable Care Act, and the result is that it’s more resilient than anticipated.
Those tax credit expirations and premium increases were an ACA stress test. They gave us valuable insight into the stability of the Affordable Care Act, and the result is that it’s more resilient than anticipated. That stability reduces the likelihood of severe disruption in 2027 pricing.
Medical inflation
So, what is medical inflation? It isn’t a new term, but it seems to be in more and more conversations as of late. Medical inflation (aka medical cost trend) tracks the pricing trends in healthcare services and products such as hospital stays, prescription drugs, physician services, and medical technology. It is measured by the Bureau of Labor Statistics through the Medical Care Consumer Price Index.4
Medical inflation has historically outpaced regular inflation, and is expected to stay high in 2026, increasing to 10.9% while global CPI is expected to decline to 3.7%.5
The reason medical inflation is relevant here is its relationship to group health insurance. When medical inflation increases, group insurance carriers pass on that cost to employers. This has been happening for years, resulting in persistent price increases and limited cost-control options for employers.
This puts the employer group market in a position of being structurally unstable, and leaves employers looking for other options.
Read: Switching from your group health insurance plan
HRA growth
More employers are adopting HRAs
Given the (group) health insurance landscape, it’s not surprising to learn that HRAs are gaining popularity. ICHRA growth in particular is showing steep increases, with ICHRA enrollment tripling in 2026.6
There is a lot to love about HRAs. Our clients are typically drawn to three major benefits: pricing, budget control, and employee benefits. These aren’t just arbitrary advantages. HRAs were designed to work this way—and work hard—for employers and employees.
Defined contribution health plans prioritize budget
HRAs are a defined contribution health insurance model where the employer chooses the health benefits allowance for employees. It puts the employer in control of the budget instead of being forced to choose a plan.
A good comparison is a 401(k). Can you imagine if employers were forced to choose one investment for their entire staff? With a 401(k), the employer sets the contribution amount instead of choosing the fund. The same goes for defined contribution plan health insurance. The employer sets the budget, the employees choose their health plan.
Defined contribution health plans are also portable, meaning the employee can keep the plan even if they move on from the company.
Risk pools give employers a distinct advantage
Risk pools are an important component when comparing ICHRAs to group insurance. In this instance, the risk pool refers to the number of insured people.
Let’s say you have 100 employees. If you have group insurance and five of your employees need high-cost care, that’s 5% of your staff. If you have an HRA, your employees are part of the 23 million people enrolled in the ACA Marketplace, so those five high-cost employees represent 0.00002174% of the insured population.
You’ve just transferred your risk to the ACA Marketplace.
Health benefits strategy
So, where do we go from here? Group health plans used to be the default, but that’s being evaluated with a sharper eye. Given the higher-than-expected ACA enrollment plus the advent of HRAs, employers are realizing they have better choices. And while many group plans are seeing significant renewal increases driven by claims volatility, ACA premiums are projected to rise more modestly, keeping ICHRA firmly in the conversation for 2027.
The employers who are getting ahead of the game are working on their health benefits strategy now. By benchmarking in the early part of the year, companies will be well-positioned to implement and execute that strategy before open enrollment.
If you’re an employer, take a look at Take Command HRAs for small businesses, mid-market companies, and enterprise corporations. That will give you a good overview and let you start formulating questions. The best approach involves executive leadership, HR, and finance to get a full perspective.
If you’re a health insurance broker, our advice is to move clients from reactive renewals to proactive strategic evaluation. Depending on the market dynamics, that could be moving to an HRA or not. It all depends on what’s best for their business and employees. You can prepare for those conversations by reading ICHRA for brokers and our broker toolkit.
Whatever your role, Take Command experts are here to answer your questions.
Keep reading
Double digit renewals & risk don’t have to come with the territory.
Group health insurance doesn't work for every company. If you're seeing big increases year over year, you've got a risk problem. Luckily, there's an easy alternative to group plans that provides modern, personalized benefits without the unpredictability and lack of control.
Is it time to ditch that group health plan?
Health insurance exchanges by state and the best areas for an HRA
Individual states are in charge of their own health insurance marketplaces. If you run a business with locations in different states, or if you’re a broker with regional scope, it’s good to know how to navigate the state of health insurance in your area and how an HRA can help you maximize your budget and employee happiness.
Find out how to leverage the ACA Marketplace and maximize your budget
HRA Hub: A simple way to offer health benefits
See how Take Command's HRA Hub handles HRA setup, enrollment, compliance, and ongoing support — so you don’t have to manage a group health plan.
How our HRA administration works
Contact Take Command to learn about HRAs
We’re here to help and answer your questions.
References
- https://www.aha.org/news/headline/2024-12-06-cbo-22-million-consumers-will-lose-insurance-2026-if-aca-enhanced-premium-subsidies-expire
- https://www.healthcaredive.com/news/affordable-care-act-enrollment-2026-cms-snapshot-23-million/810790/
- https://www.healthcaredive.com/news/affordable-care-act-enrollment-2026-cms-snapshot-23-million/810790/
- https://www.bls.gov/cpi/factsheets/medical-care.htm
- https://lockbox.lockton.com/m/7c1c3bd3ad879713/original/Lockton-2026-Global-Healthcare-Cost-Trend-Report.pdf
- ICHRA enrollment triples in 2026
Let's talk through your HRA questions
Our HRA management solutions help companies of all sizes reimburse employees for health insurance, giving employees choice over what works best for them and promoting health and wellness within an organization. We offer ICHRA and QSEHRA administration software designed to be simple, effective, and empowering. Take Command is trusted by 7,000+ leading organizations and the only HRA administrator with in-house enrollment support.
