New Mexico employers with 50 or fewer workers will pay an average of 19.8% more for fully insured health coverage next year. The state’s Office of the Superintendent of Insurance signed off on 2027 small group rates on Thursday.
The approved figure is close to what carriers requested. Insurers had filed for an average of about 20.2%, according to preliminary filings tracked by ACASignups.net. For 2026, the regulator approved an average of 16.8%.
Nationally, the median proposed small group increase for 2027 is about 14%, according to a Peterson-KFF Health System Tracker review of filings from 295 insurers. That number is a median of proposals and is not weighted by enrollment, so it works as a rough benchmark rather than a direct comparison.
Five carriers will sell small group plans in New Mexico next year. They are Blue Cross and Blue Shield of New Mexico, run by Health Care Service Corp.; Presbyterian Health Plan and Presbyterian Insurance Co.; and UnitedHealthcare of New Mexico and UnitedHealthcare Insurance Co. All five also sold small group coverage this year.
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The regulator pointed first to 2025 claims, which came in above expectations and serve as the base year for 2027 pricing. Superintendent Alice Kane was blunt about it last month when explaining the individual-market rates. “New Mexico had a very bad claims year in 2025,” she told KRQE.
Heavier use of medical services and higher prices for care and prescriptions also fed into the filings. In its September release on individual rates, the office said brand-name drugs and biologics made up 85% of drug costs in the state.
Regulators also pointed to a change in who remains in the market. Businesses with healthier workforces have been moving to coverage outside the ACA small group market, the office said, leaving a smaller and sicker group behind.
When the 2026 rates were approved, the office said almost 36,000 New Mexicans were enrolled in small group plans. Coverage of Thursday’s decision put enrollment at more than 30,000. The two figures may not be measured the same way, but they suggest the market lost members over the year.
KFF data shows the same trend nationally over a longer period. Fully insured small group enrollment fell from about 17 million people in 2013 to roughly 10 million in 2024. Insurers attribute much of that decline to healthier groups moving to level-funded plans. Those plans are largely exempt from state insurance rules and from some ACA requirements.
Some carriers are shifting with the market. Anthem Blue Cross Blue Shield is leaving Ohio’s ACA small group market in 2027 and putting more into level-funded plans and multiple employer welfare arrangements, Healthcare Finance News reported.
Read next: More large employers are turning to ICHRA as group costs climb
Thursday’s decision follows the regulator’s September approval of a 24.4% average increase for individual plans sold on and off BeWell, the state’s ACA exchange. Carriers had asked for about 25.6% on average. The individual-market increase for 2026 was 36%.
Kane appeared before the Legislative Finance Committee in late September to defend those rates. She told lawmakers that state law requires her office to approve any rates that are actuarially sound. Christian Myers, the office’s chief actuary, said he wasn’t looking forward to paying more either. But he said the rates “are actuarially justified based on the data that is submitted,” the Santa Fe New Mexican reported.
Sen. George Muñoz, a Gallup Democrat, accused insurers of taking advantage of New Mexicans. Kane said her office would consider adding a public comment period before approving future increases.
The office has also cited state rules that add to costs. These include a ban on cost-sharing for in-network behavioral health services and limits on prior authorization for some of those services. Those comments were made about the individual market, and the office has not said how much the rules add to small group premiums.
Affordability is a live political issue in Santa Fe. This year, lawmakers passed House Bill 4 to increase distributions from the state’s Health Care Affordability Fund, which mainly subsidizes coverage bought through BeWell. Both candidates for governor, Democrat Deb Haaland and Republican Gregg Hull, have campaigned on health costs.
Read next: Small businesses absorb 31% premium surge rather than cut health coverage
Most New Mexico small group renewals for Jan. 1 will now carry a double-digit increase. Brokers can expect clients to ask whether there’s a cheaper way to keep their coverage.
Level-funded plans can cost less than fully insured coverage for groups with young, healthy staff. But they are underwritten, and renewals can jump after one bad claims year. An ICHRA gives the employer a fixed monthly contribution, but in New Mexico it would move employees into an individual market that just took a 24.4% increase before subsidies.
So far, many small employers have simply absorbed the cost. Gusto’s payroll data shows the share of small businesses offering health coverage held steady even as premiums rose 31% between 2022 and 2026.
Each healthy group that leaves raises costs for the employers that stay in the fully insured pool, many of which have older or sicker workforces and fewer alternatives. Insurers made that case in their 2027 filings. Expect to hear it again when 2028 rates are filed.
