Health Care Costs 2027: Employers Brace for Another Sharp Increase

By Emily Carter | Health & Science Correspondent

American employers are heading into 2027 expecting another unusually large increase in health-benefit spending, putting renewed pressure on companies and workers already dealing with rising medical expenses. New projections show that health care costs 2027 could rise about 11% on average if employers made no changes to their plans, while employers surveyed by Marsh expect the final increase to average 8.2% after planned cost-reduction measures. The 8.2% projection would be the highest annual increase since 2003.

The distinction between those figures is important. The 11% number represents the underlying pressure on existing employer health plans before changes are made. The 8.2% figure reflects what employers currently expect after using plan-design and other strategies to contain part of that increase.

A separate Aon projection points in the same direction, forecasting a 9.5% increase in U.S. employer health-care costs in 2027 before mitigation measures. Taken together, the surveys suggest that another year of elevated health-care inflation is becoming a significant budgeting issue for American businesses and a potential affordability issue for workers.

What the 11% Health Care Cost Increase Really Means

Marsh’s preliminary 2026 National Survey of Employer-Sponsored Health Plans is based on responses from more than 1,800 U.S. employers. Respondents said the cost of their current plans would increase by about 11% on average if they took no action to reduce spending. After planned cost-reduction measures, employers expect the increase to come down to 8.2%.

For workers, that does not mean an 11% premium increase is automatically coming in 2027.

Employers can change the structure of their health plans before the new coverage year begins. They may adjust deductibles, employee contributions, copays, prescription coverage, provider networks or other elements of the benefit package. Some may also negotiate with insurers and health-care providers or introduce programs intended to steer patients toward lower-cost, higher-quality care.

The result is that the underlying cost of medical care can rise faster than the amount ultimately paid by an employer or employee.

Why 2027 Could Be the Highest-Cost Year Since 2003

The Marsh projection stands out because the expected 8.2% increase would be the largest annual rise in its measure since 2003. It would also represent the fifth consecutive year of elevated health-benefit cost growth, according to the survey.

That does not mean every employer will experience an 8.2% increase. Company size, workforce health, geography, insurer negotiations, plan design and the number of high-cost claims can produce very different results.

But sustained increases can compound. Even when employers absorb much of the additional expense, higher health-benefit spending can influence decisions about wages, hiring, other employee benefits and the overall cost of employing workers.

Aon separately expects employer health-care costs to rise 9.5% in 2027, following several years of increases near double-digit levels. Aon estimates average health-care costs will exceed $19,000 per employee in 2027 before employers introduce additional cost-management measures.

What Is Driving Employer Health Care Costs Higher?

There is no single explanation for the increase. Employer surveys point to a combination of higher medical utilization, expensive prescription drugs, chronic conditions, complex treatments and high-cost claims.

Cancer Care

Cancer remains one of the most important sources of employer health spending. The Business Group on Health reported in August that cancer was the top condition driving health-care spending for the fifth consecutive year, with 70% of surveyed employers identifying it as their No. 1 cost driver in 2026.

Rising cancer spending does not simply mean that care is becoming less efficient. New diagnostics, targeted therapies and other advanced treatments can improve outcomes and give patients more options, but many of those treatments are expensive.

Specialty Drugs and GLP-1 Treatments

Prescription drugs are another major pressure point. Aon has identified specialty medicines and GLP-1 therapies among the factors contributing to higher costs, alongside greater medical utilization and more high-cost claims.

GLP-1 medications used for diabetes and weight management have attracted particular attention from employers because of their rapid growth in use and their cost.

Marsh estimates that GLP-1 prescription use accounts for roughly one percentage point of overall 2027 health-benefit cost growth. That makes the drug class an important contributor, but not the sole explanation for rising employer health-care costs.

The Business Group on Health found that 67% of surveyed employers currently cover GLP-1 drugs for weight management. Among employers providing that coverage, only 72% said they were likely to continue it in 2027, while 10% said they were unlikely to do so.

Provider Consolidation and Higher Utilization

Consolidation among hospitals, physician groups and health systems can also affect negotiations over medical prices. At the same time, employers are seeing more use of medical services and an increase in chronic and complex conditions.

Aon cited higher utilization, chronic disease prevalence, high-cost claims, physician and outpatient spending, specialty medications and provider consolidation among the forces pushing costs higher.

How Higher Health Care Costs Can Reach Workers

Employers do not necessarily pass every increase directly to employees. In fact, Aon says employers covered about 82% of health-plan costs in 2026.

Still, workers can feel the pressure in several ways.

A company might increase the amount deducted from each paycheck for coverage. Another employer could keep payroll premiums relatively stable but raise the deductible, meaning employees pay more themselves before insurance begins covering a larger share of eligible expenses.

Other changes can involve copays, coinsurance, prescription coverage or provider networks.

That is why looking only at the monthly premium can give workers an incomplete picture of what a health plan actually costs.

The Hidden Cost: Out-of-Pocket Health Spending

Aon estimates that employees will spend an average of $5,297 on health care in 2026, including $3,130 in payroll contributions and $2,167 in out-of-pocket costs. Total employee costs increased 7.9% from the previous year, while out-of-pocket spending alone rose 10.2%.

These are averages, not predictions for every worker. A healthy employee who rarely uses medical services can have very different expenses from someone managing cancer, diabetes, heart disease or another chronic condition.

But the figures illustrate why health insurance affordability is about more than premiums. Deductibles, copays, coinsurance and prescription expenses can create significant financial exposure when someone actually needs care.

Why Employers Are Changing Health Plans

Businesses face a difficult balancing act. Health benefits remain an important tool for recruiting and retaining employees, but health-care spending is also one of the largest recurring costs associated with the workforce.

Absorbing every increase can put pressure on company budgets. Shifting too much of the cost to workers can make benefits less attractive and increase financial stress for employees.

That tension is encouraging employers to look beyond simply raising premiums and deductibles. Many are exploring ways to reduce the underlying cost of care while preserving access to services that employees need.

How Employers Are Trying to Control Costs

Employers are increasingly examining provider networks, pharmacy benefits, care-management programs and strategies that guide employees toward higher-quality care.

The Business Group on Health said employers are using measures including requests for proposals to secure lower prices, stronger prevention and primary-care efforts, elimination of underperforming vendors and programs aimed at areas of high spending.

These approaches can have advantages. Steering patients toward high-quality providers, for example, can potentially reduce unnecessary or inefficient care while improving outcomes.

But cost-management can also create tradeoffs. A narrower network may reduce premiums while limiting where a patient can receive care. A tighter prescription policy may reduce pharmacy spending but make access more complicated for some patients.

The GLP-1 Dilemma for Employers

GLP-1 medicines have become a particularly difficult benefits question because their clinical value and financial impact can exist at the same time.

These medicines are used to treat conditions including Type 2 diabetes, and some are approved for chronic weight management. For employers, expanding use can increase pharmacy spending substantially.

That has led some companies to consider eligibility rules, prior authorization, provider requirements or other utilization-management strategies. Others are reconsidering whether weight-management coverage should continue at all.

Business Group on Health reported that 14% of employers had already eliminated GLP-1 coverage for weight loss or planned to do so in 2027.

The debate is unlikely to be resolved simply by asking whether the drugs work. Employers are also weighing who should receive coverage, how long treatment should continue and whether the health benefits justify the cost to the plan.

Why Cancer Remains a Major Cost Driver

Cancer presents a similar economic challenge.

Advances in treatment have expanded the number of therapies available to patients, including highly specialized drugs and complex procedures. Those advances can improve survival and quality of life, but they can also increase spending per patient.

Employers are therefore looking at prevention, screening and care coordination alongside access to specialized cancer treatment. The Business Group on Health said many employers are expanding screening support and considering cancer centers of excellence as part of their benefits strategies.

The goal is not simply to spend less. It is increasingly about trying to spend health-care dollars where they can produce better outcomes.

What Health Care Costs 2027 Could Mean for Families

For employees, the biggest changes may become visible during open enrollment.

Workers should expect their employer’s benefits materials to show the monthly premium contribution, deductible, out-of-pocket maximum, copays, coinsurance, prescription coverage and provider-network rules.

They should also look at how much the employer contributes to the premium and whether health savings account or flexible spending account options are available.

A plan with the lowest monthly premium is not necessarily the least expensive option for someone who expects regular doctor visits, prescription medications or significant medical treatment.

The Broader U.S. Health-Care Affordability Problem

Employer-sponsored insurance is only one part of the U.S. health-care system. Rising medical spending affects businesses, employees, insurers, hospitals, doctors, patients and taxpayers in different ways.

The broader affordability problem also cannot be reduced to insurance premiums. Underlying prices for medical services, prescription drugs, hospital care and specialty treatment influence what insurers and employers ultimately have to pay.

For many Americans, the growing debate over health-care affordability and coverage is therefore connected to a much larger question: how the country pays for medical care while maintaining access to treatment.

Could Health-Care Cost Pressure Continue Beyond 2027?

There is no reliable way to predict the exact level of employer health-care costs in 2028. But current surveys suggest employers are increasingly treating cost growth as a structural problem rather than a one-year spike.

Specialty medicines, cancer treatment, chronic conditions, medical utilization and provider consolidation could continue to put pressure on employer-sponsored health insurance.

The Business Group on Health’s latest survey projected a 9.2% median health-care cost trend for 2027 before plan-design changes, with the figure falling to 8% after those changes. That separate forecast reinforces the broader picture of persistent cost pressure, even though its methodology and figures differ from the Marsh and Aon projections.

What Workers Should Watch During 2027 Open Enrollment

When employers release their 2027 benefits information, workers should compare more than the paycheck deduction.

• Premium contribution: How much comes out of each paycheck?
• Deductible: How much must be paid before the plan begins sharing more of the cost?
• Out-of-pocket maximum: What is the maximum annual exposure for covered services?
• Prescription coverage: Which medications are covered and under what conditions?
• Provider network: Are preferred doctors, hospitals and specialists still included?
• Employer contribution: How much of the total plan cost does the company cover?
• HSA or FSA options: Are tax-advantaged accounts available and how do they interact with the plan?

Those details can matter more than the headline premium when a family actually needs medical care.

The Bottom Line for American Workers

The most important number in the health care costs 2027 outlook may not be 11% by itself. That figure describes what could happen to current employer plans without intervention.

The more consequential figure is the 8.2% average increase Marsh employers still expect after planned cost-reduction measures. Aon, using a separate methodology, projects a 9.5% increase, while Business Group on Health forecasts a 9.2% median trend before plan-design changes. None of these numbers guarantees what an individual worker will pay.

What they do show is a sustained period of elevated health-care cost growth. Employers may continue absorbing much of that pressure, but workers can still encounter higher premiums, deductibles, out-of-pocket expenses or changes to coverage.

For American households, the central question is becoming harder to ignore: How much longer can employers and workers absorb health-care cost increases that continue to outpace broader inflation?