Key Takeaways
- Employer health plan costs may jump 8.2% in 2027, the biggest rise since 2003.
- Providers, drug prices and AI billing tools are driving costs higher.
- Workers face bigger deductibles, copays and reduced benefits.
Employer-sponsored health insurance costs are projected to rise 8.2% in 2027, the steepest annual increase in more than two decades.
Survey points to a fifth straight year of rising costs
Consulting firm Marsh, formerly known as Mercer, surveyed more than 1,800 employers about their expected costs for next year. The findings mark the highest projected increase since 2003 and the fifth consecutive year of rising health benefit costs.
Without any changes to current plans, employers estimate costs would climb 11% in 2027. Many companies plan to offset part of that increase by shifting more expenses onto workers or trimming certain benefits.
Beth Umland, Marsh’s director of employer research for health and benefits, said this year proved difficult and next year looks tougher still. Ellen Kelsay, chief executive of the Business Group on Health, described the pattern as a new normal for Employer Health Insurance spending.
Several factors are pushing costs higher
Analysts point to a mix of causes behind the spike. Hospital and provider consolidation has given large health systems more leverage when negotiating prices with insurers. Government healthcare funding has not kept pace with inflation, adding further pressure on private insurance plans.
Rising use of GLP-1 medications for weight loss and diabetes also plays a role. Marsh estimates that growing use of these drugs alone accounts for a full percentage point of next year’s overall cost increase, even as some employers respond by dropping coverage for the medications entirely.
Newer AI-powered documentation and coding tools used by healthcare providers are contributing as well. These tools let providers capture more detailed billing codes, which can raise reimbursement claims without a matching rise in actual patient care.
Other surveys point to similar trends. Consulting firm PwC projects commercial group health costs will rise 9% in 2027, the highest rate the firm has recorded in 17 years, while insurance broker Aon forecasts a 9.5% increase.
Workers likely to feel the impact
Nearly half of large employers plan to raise deductibles, copays or other out-of-pocket costs on Employer Health Insurance plans for workers next year, according to related survey data. Some companies are also considering ending coverage for spouses who have access to insurance through their own employer.
Health costs have outpaced general inflation for years. One employer group survey found that health care costs could rise 76% between 2018 and 2027, roughly double the broader inflation rate over that period.
Many Americans already report difficulty affording care, even those with active insurance coverage. As Employer Health Insurance costs continue climbing, workers are likely to carry a growing share of that burden through higher premiums and reduced benefits in the years ahead.
