The cost of health insurance is expected to rise in 2027 and beyond as federal cuts to Medicaid take hold, likely resulting in more uncompensated care. Those paying for private insurance—including Granite State businesses—are likely to shoulder some of those costs, making it critical to find policy solutions to protect businesses from rising insurance costs, experts say.
“New Hampshire is facing a difficult stretch ahead.” says Lucy Hodder, director of health and life sciences law at the University of NH’s Franklin Pierce School of Law in Concord. “There are substantial projections of increased costs to those purchasing insurance in 2027, for a variety of reasons.”
Many of those reasons are linked to the One Big Beautiful Bill Act, which was signed into law last summer. The bill mandates changes to Medicaid, the joint federal and state program providing free or low-cost health insurance to people with limited income and resources, including children, pregnant women, older adults, and people with disabilities. Those changes are likely to reduce the number of Granite Staters with Medicaid over the next few years, while also reducing a key source of tax revenue the state uses to cover uncompensated care for services provided to people who cannot pay.
Historically, some of the uncompensated care borne by providers, most often hospitals, is passed on to private payers via increased health insurance premiums, according to KFF, a nonprofit focused on health care policy. For NH business owners, especially those with small group coverage (50 or fewer employees), that could mean the continuation of increased costs.
“Not only does [that] hurt their ability to attract and retain employees, it hurts [their] ability to grow business,” says John Reynolds, NH state director of the National Federation of Independent Business.
As experts warn of the danger of uncompensated care, they also believe there are policy solutions, including tax incentives for businesses and more flexible benefits packages for employees, that could help mitigate costs. “We need to do it the New Hampshire way,” Hodder says, “which is to come together and figure out what has worked in the past and how to bolster that in the future.”
Increase in Uncompensated Care Likely
The signing of the Big Beautiful Bill Act set in motion changes to Medicaid that are now “rolling toward us,” Hodder explains. Those changes include work requirements for many adults, redetermination of eligibility every six months, and more limits to retroactive Medicaid coverage. In NH, the changes—along with the expiration of tax credits under the Affordable Care Act—are projected to lead to an additional 32,000 uninsured people by 2034, according to KFF. That’s an increase of about 2%. According to the NH Hospital Association, in 2020, NH hospitals provided over $700 million in uncompensated care to patients, including those covered by government payers such as Medicaid and Medicare.
By 2034, that could lead to a $54 million increase in uncompensated care costs in NH, according to the Center for American Progress.
At the same time as uncompensated care costs are likely to rise, a mechanism for paying for them in NH will decrease. The federal legislation mandates changes to provider taxes, including NH’s Medicaid Enhancement Tax (MET), which is the state’s fourth-largest source of tax revenue, according to the NH Fiscal Policy Institute. The tax—currently set at 5.4%—will be gradually reduced starting in 2028, until it reaches the new federal cap of 3.5% in 2031.
“What is collected in MET and paid back to hospitals helps cover the uncompensated care,” says Jessica Williams, senior policy analyst with the NH Fiscal Policy Institute. “Hospitals may be receiving less back over time.”
These changes will take place gradually, notes Kathy Remillard, deputy communications director with the NH Department of Health and Human Services. Most will take effect between state fiscal year 2028 and the end of state fiscal year 2032. “As a result, it is too early to evaluate the full impact of these changes,” Remillard says. “The Department will be monitoring the situation in the
coming months.”
Experts, however, say available projections show that costs are likely to increase for businesses as hospitals shift the cost of uncompensated care to other payers, including private health insurance companies, who in turn may pass those costs to businesses.
“It’s a little too early to say how these changes will impact [things] in particular,” Williams says, adding the changes “can certainly increase health care costs across the board if more people become uninsured.”
Small Businesses Could be Hit Hard
Concerns about rising costs for health insurance are nothing new to business owners. “The business community has always had health care costs and premiums as number one and number two on their list of concerns,” Hodder says.
However, any extra costs may push the small group market to the “breaking point,” says Reynolds of the National Federation
of Independent Business.
Between 2020 and 2024, the average premium for a small group market insurance plan rose more than 19% from $530 in 2020 to $635 in 2024, according to data from the NH Insurance Department. “That’s not a great trend,” Reynolds says.
Increased insurance costs for small group payers puts smaller employers “on the back foot from the get go,” when compared with larger employers with access to more favorable health insurance options, Reynolds says. When plans are costly—or simply unavailable—employees might opt to work for companies with better benefits packages. “This puts them at a huge disadvantage when trying to attract and retain employees,” he says.
Business are having to be creative with benefit options, such as with Individual Coverage Health Reimbursement Arrangements (ICHRAs), or by offering Section 125 cafeteria plans, which can be a cost-effective way for some businesses to help employees pay for healthcare costs, Hodder adds. These plans offer benefits like flexible savings accounts (FSAs) and health savings accounts (HSAs) pretax. That can lower the employee’s taxable income and reduce the amount an employer pays in payroll tax. But Hodder says these small fixes won’t solve the problem of skyrocketing health costs.
Policy Solutions
Despite the concerning changes to the health insurance landscape, Hodder says she is optimistic that NH will find a solution that serves business owners, healthcare providers, and individuals. “We have historically had a commitment to a robust, efficient, well-run Medicaid system,” she says.
In January, the federal government approved an extension of NH’s State Innovation Waiver (also known as a section 1332 waiver), which allows states to modify rules for marketplace insurance options. The waiver has helped to stabilize premium increases on the individual marketplace and kept the marketplace viable, Hodder says.
“It’s important for individuals, small businesses, and sole proprietors that we have an affordable marketplace option,” she says. “Innovation and creativity around valuable health insurance options over the next few years is going to be very important.”
Reynolds would like to see NH adopt tax incentives to encourage programs that allow employers to reimburse employees for individual health plans, rather than offering group plans. These programs include Individual Coverage Health Reimbursement Arrangements and Qualified Small Employer HRAs like those considered last legislative session via Senate Bill 635.
The Granite State is “uniquely suited” for these plans because “New Hampshire’s Individual Health Insurance Market premiums are relatively low,” Reynolds says. Connecticut, Indiana, and Mississippi have adopted tax incentives for businesses offering Individual Coverage Health Reimbursement Arrangements, and the Pennsylvania house passed a similar measure in June.
The Granite State also could use more than $1 billion in federal Rural Health Transformation Program grant funding, known as GO-NORTH funding in NH, to help make up for the impact of Medicaid losses, especially in rural areas, Hodder says. Although establishing sustainable solutions with temporary grant funding is difficult, she adds, NH has “a history of accessing grant dollars that have been hugely impactful.” To date, NH has been awarded $204 million of GO-NORTH funds.
While running a business and navigating employee benefits can be overwhelming, Hodder says it’s important that business owners continue to stay informed and support policy decisions that could help them cope with the impact of uncompensated care and rising health care costs. “It’s really important that New Hampshire businesses understand what’s coming,” she says, “and come to the table.”
