Employers Facing Record Jump in Healthcare Costs for 2027
U.S. employers are preparing for one of the sharpest increases in healthcare benefit costs in more than two decades, adding new pressure to corporate budgets and potentially increasing what millions of workers pay for health coverage in 2027.
Preliminary employer survey data released ahead of the 2027 benefit year shows that average health benefit costs per employee are projected to rise 8.2% in 2027, even after companies implement measures designed to control spending. That would represent the largest annual increase since 2003 and the fifth consecutive year of unusually high healthcare cost growth.
Without cost-reduction measures, employers estimate that maintaining their existing health plans could result in an average increase of approximately 11%.
The projections are based on responses from more than 1,800 U.S. employers and highlight a growing challenge for businesses: healthcare expenses are increasing much faster than many companies can comfortably absorb.
Why Healthcare Costs Are Rising
Several forces are contributing to the expected increase.
Prescription drug spending remains one of the biggest concerns. Employers are facing rapidly rising costs for specialty medications, including advanced cancer therapies and treatments for rare diseases.
Another major factor is the expanding use of GLP-1 medications for obesity and weight management. Increased utilization of these drugs alone is estimated to account for roughly one percentage point of projected healthcare cost growth in 2027.
Healthcare providers are also adopting more sophisticated technology for clinical documentation, billing and claims processing. AI-enabled systems can help providers submit more detailed claims, but they may also contribute to higher reimbursement levels and increased costs for employer-sponsored insurance plans.
Hospital consolidation is creating additional pressure. As hospitals and physician groups become part of larger healthcare systems, those organizations may gain greater negotiating power when establishing prices with insurers.
Employers are also dealing with increasingly expensive medical claims. New therapies can dramatically improve outcomes for patients, but some treatments can cost hundreds of thousands—or even millions—of dollars.
Cancer remains the leading healthcare cost driver for many large employers. In a separate 2027 employer healthcare survey, 70% of participating employers identified cancer as their No. 1 condition driving healthcare spending in 2026.
Pharmacy expenses have become especially significant, representing roughly 25% of total healthcare spending among surveyed large employers.
Employees Could Pay More in 2027
The rising costs are unlikely to remain solely an employer problem.
About 59% of employers surveyed plan to make cost-cutting changes to their health benefits for 2027. Those changes could include higher deductibles, adjustments to plan designs or other measures that increase employees’ out-of-pocket expenses.
Many large employers are also considering increasing the percentage of insurance premiums paid by workers.
That means employees could see larger healthcare deductions from their paychecks during the 2027 plan year while simultaneously facing higher deductibles or other expenses when they receive medical care.
The financial pressure is already significant. In 2026, employees are expected to spend an average of about $5,297 on healthcare, including approximately $3,130 in payroll premium contributions and $2,167 in out-of-pocket expenses.
Employers, meanwhile, continue to cover the majority of health plan expenses. Companies currently pay roughly 82% of the average plan cost, making healthcare inflation a major corporate expense.
Companies Are Searching for New Solutions
Businesses are responding by examining healthcare spending more aggressively.
Employers are increasingly focusing on high-cost claims, negotiating with healthcare vendors, reviewing pharmacy benefit arrangements and directing workers toward providers that deliver better outcomes at lower costs.
Some companies are introducing plans that offer lower costs when employees choose high-performing healthcare providers. Others are reconsidering coverage rules for expensive medications or evaluating alternative pharmacy benefit managers.
Healthcare benefits are increasingly becoming a broader business strategy issue rather than simply an employee benefits issue.
Rapidly increasing medical expenses can influence hiring plans, wage growth, corporate profitability and decisions about how much companies invest in other parts of their businesses.
Another major concern is unpredictability. Employers have underestimated actual healthcare cost growth for several consecutive years, making annual budgeting increasingly difficult.
One major employer survey projects a 9.2% median healthcare cost increase for 2027 before benefit changes, while another industry analysis projects costs could rise about 9.5% before employers implement mitigation strategies, pushing average healthcare costs above $19,000 per employee.
Although the exact estimates differ depending on methodology and employer population, they point in the same direction: 2027 is shaping up to be an exceptionally expensive year for employer-sponsored healthcare.
For workers, the impact may become clearer during upcoming open-enrollment periods as companies announce premiums, deductibles and benefit changes.
For employers, the challenge will be more complicated: controlling rapidly rising expenses without making healthcare coverage unaffordable for employees.
With medical services, prescription drugs and high-cost treatments continuing to rise, healthcare affordability is becoming one of the most significant workforce and financial challenges facing U.S. businesses heading into 2027.
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