In UBS's annual survey of employee benefits administrators, Elevance Health has emerged as the highest-rated US health insurer, while the three major pharmacy benefit managers appear well-positioned to weather the surge in contract reviews scheduled for 2027.

The research team led by UBS analyst A.J. Rice polled 166 benefits managers from companies employing over 100 workers. The survey delved into insurer competitive standing, projected medical and prescription drug expenses, benefits priorities, and purchasing strategies for the year ahead.

Elevance Health, which operates Blue Cross Blue Shield plans across 14 US states, secured the top overall score of 4.34 out of 5. UnitedHealth followed in second place with 4.23, while Kaiser Permanente trailed closely at 4.20. Elevance led in two categories: customer service and medical provider networks. CVS Health's Aetna division topped the rankings in care and disease management, whereas Kaiser Permanente excelled in plan support and digital tools. Last year's overall leader, Cigna, saw a slight dip in its aggregate ranking this year, though it continues to dominate among employers with 501 to 5,000 employees.

This survey arrives at a pivotal moment as employers gear up to reconsider an unusually high volume of health plan contracts, signaling a positive outlook for both Elevance Health and UnitedHealth. Elevance's first-place finish could bolster its efforts to attract new clients, while UnitedHealth enjoys a dual advantage of heightened customer satisfaction and the lowest exposure to client re-bidding. CVS Health and Cigna face mounting pressure on their insurance operations, yet their pharmacy benefit segments remain competitive.

At the industry level, the rapid escalation of medical costs is likely to drive premiums higher, but it also poses risks for insurers that misprice their products or fail to control claims effectively.

More Employers Are Opening Contracts to Competitive Bidding

Approximately 77% of respondents indicated plans to seek new proposals for all or most of their core medical benefits in 2027. This marks a significant jump from 53% last year and 41% the year prior. Aetna and Blue Cross Blue Shield plans outside of Elevance's network face the highest re-bidding risk at 90%, followed by Cigna and Elevance. UnitedHealth carries the lowest re-bidding risk among major insurers.

Procurement criteria are also shifting. Cost and discounts remain the top priority, but only 36% of respondents ranked it first, a dramatic decrease from 89% last year. Network coverage now sits in second place, followed by customer service and care management. Telehealth and flexibility have gained increased importance in the selection process.

Accelerating Medical Cost Inflation

Employers project that total medical costs for self-insured plans will rise by 7.9% by 2027, up from the 7% expected this year. Adjustments to benefit packages, sometimes referred to as "benefit buy-downs," are anticipated to shave roughly 0.3 percentage points off that increase, resulting in a net cost escalation of about 7.5%. Employees at self-insured employers are expected to contribute 5.8% more toward premiums and out-of-pocket expenses next year. Fully insured employers anticipate average employee premium increases of 5.5%, a moderation compared to the 8.3% hike forecast in the previous survey.

GLP-1 obesity treatments have been flagged as the largest contributor to medical cost growth, followed by rising prices for medical services. Specialty drugs and high-cost patients remain significant sources of cost pressure.

Large Pharmacy Benefit Managers Retain Their Edge

Competition among pharmacy benefit managers is intensifying, with 92% of respondents stating their PBM contracts will expire in 2027. About 65% plan to issue requests for proposals, more than double the 30% from last year. Despite this, the three major PBMs continue to hold a favorable competitive stance. CVS Caremark, Express Scripts (a Cigna subsidiary), and Optum Rx (under UnitedHealth) face relatively low competitive bidding risk and are the most likely to strengthen their market positions in 2027.

Cost management remains the most critical factor when selecting a PBM. Transparency has risen to second place, tying with specialty drug management, while the importance of rebates has plummeted. Only 11% of respondents cited rebates as a primary consideration, down from 37% in the prior year. Employers expect prescription drug costs to climb by 5.6% in 2027, slightly above this year's estimated 5.4%.

GLP-1 Coverage Expands Significantly

The survey reveals that 91% of employers now offer coverage for new obesity medications, a substantial increase from 52% last year. However, most employers impose restrictions on coverage, including pre-authorization requirements and minimum body mass index thresholds. UBS estimates that 19.1% of covered employees and their dependents currently use GLP-1 therapies for obesity treatment, with respondents projecting this figure to rise to 20.6% next year.

Weight management and mental health care are emerging as the fastest-growing areas of employee benefits spending. Approximately 55% of employers anticipate increasing budgets in both categories, reflecting the growing economic and clinical significance of obesity treatment and behavioral health services.