Employer Health Costs: Cancer Leads 2027 Spending Surge

Cancer moves to the top of the employer cost list

For five years in a row, large employers have named cancer as the condition that drives the most health spending. This year, the gap between cancer and every other condition got wider. The Business Group on Health's latest survey covered 127 employers with more than 11 million people, 8.7 million of them in the U.S. In it, 70% of respondents called cancer their No. 1 cost driver for 2026, up from 58% in 2025.28 Overall, 92% put cancer among their top three conditions. Musculoskeletal conditions came second at 68% and cardiovascular conditions third at 37%.28

The survey ties this to a broader forecast. Employers expect their health costs to rise by a median of 9.2% for the 2027 benefit year, or about 8% after plan design changes.28 The findings came out in late August, just before open enrollment, when workers see what next year's coverage will take out of their paychecks.28

The important point is how widely cancer spending spreads across a health plan. Much of the recent coverage of employer costs has focused on prescription drugs, especially GLP-1 weight-loss drugs. This survey describes cancer as a cost that reaches into every part of the plan.28 Ellen Kelsay, the group's president and CEO, pointed to related findings: 62% of employers are worried about hospital costs, 58% about outpatient facility costs, and pharmacy trend is running at 12%. In her reading, more cancer cases mean more surgeries, more outpatient infusions and more drug spending, all at once.28

The forecasts point the same way

The cancer findings are part of a run of 2027 forecasts that agree on direction, even though they measure different things. Marsh, the benefits consultancy formerly known as Mercer, surveyed more than 1,800 employers. It expects total health benefit cost per employee to rise 8.2% in 2027, the biggest increase since 2003. Without cost-cutting changes, employers expect 11%.13 It would be the fifth straight year of elevated cost growth, after an average projected increase of 6.7% for 2026.3 More than a third of respondents expect increases of at least 10% even after making cuts.9 Aon expects a 9.5% increase, which would push average costs above $19,000 per employee.2

The Business Group on Health also puts the long-term picture in stark terms. It estimates that health costs could rise 76% between 2018 and 2027, about twice the rate of general inflation.10 A year ago, the group was already saying 2026 costs would be 62% above 2017 levels.16

The reports differ mainly on emphasis. Marsh's actuaries say GLP-1 drugs alone add a full percentage point to 2027 cost growth. They also name two newer factors, each adding up to another point: AI-assisted billing software that leads to more claims, and higher-level claims, and larger-than-expected payouts to out-of-network providers through the No Surprises Act's dispute-resolution process.13 Cancer appears in Marsh's account mainly as an example of new treatments that work better but cost more than what they replace.1

The Business Group on Health puts cancer first. These views are compatible. GLP-1 costs show up clearly in pharmacy claims, and AI billing is a recent shock. Cancer is a steady, compounding force that runs through hospital, outpatient and drug spending. That likely explains why the large employers most exposed to catastrophic claims rank it higher than a broad sample of employers does.

Hospital prices raise the cost of each case

Rising diagnoses would strain any health plan. What makes cancer especially costly for employers is where the care happens and who sets the price. Marsh notes that consolidation into fewer, larger health systems gives providers strong leverage in price talks with insurers. Hospitals that are paid less by public programs also try to recover the difference from private plans.35 Last year, Marsh's chief actuary estimated that about a third of the overall cost increase came from higher prices charged by hospitals, doctors and other providers.23

Cancer care makes this pricing problem worse. Evernorth's oncology research finds that more cancer care now happens in outpatient settings. Between 2020 and 2024, the outpatient share of total cancer care costs rose from 54% to 58%.24 Moving care out of the hospital does not always save money, though. Evernorth cites provider consolidation, hospital purchases of independent practices, and reimbursement rules such as the 340B drug discount program as reasons unit costs can rise even when quality is the same across settings. Its review of more than a million oncology injectable claims found fewer billing entities over time and rising average costs.24 Taken together with the Business Group on Health's findings on hospital and outpatient facility costs, this suggests a large part of the cancer cost problem comes from pricing, not only from medicine.28

Drug prices add to the burden. In 2023, launch prices topped $100,000 a year for 95% of new cancer therapies.14 U.S. spending on anticancer drugs was $99 billion that year and is projected to reach $180 billion by 2028.14

Younger workers are getting cancer, and treatment costs more

The workforce angle is what separates this story from routine reporting on cost trends. Benefits consultants and insurers increasingly agree that cancer is showing up earlier in workers' careers. Evernorth found that from 2020 to 2024, average annual cost of care for new cancer cases rose from $34,745 to $48,177 for Gen Z and from $26,667 to $37,774 for millennials. Both figures are above the averages for Gen X and baby boomers.24 One reason is the mix of cancers: younger patients are overrepresented in brain and central nervous system cancers and lymphomas, which can cost more than $200,000 a year.24 A younger diagnosis also means more years of follow-up imaging, specialty drugs and survivorship care while the worker is still on the employer's plan.24

Claims data shows the same pattern. UnitedHealthcare reports that claims of $1 million or more rose 29% in a single year and 61% over four years. Cancer is the leading driver, and people aged 20 to 40 now make up 10% of high-cost claimants.21 About half of employees with these claims had no earlier warning signs, which makes them hard to budget for.21 Globally, 75% of insurers say they are seeing more cancer among people under 40.12 Sun Life expects 40% of new invasive cancer cases in the U.S. this year to occur in people aged 18 to 64.27

This matters most for smaller and self-funded employers. Marsh warns that more frequent extreme claims make costs volatile, which can upset budgets and earnings, especially for smaller firms.3 Willis Towers Watson finds that 5% of members account for 56% of spending, and the threshold for a high-cost claim has moved from $50,000 to $100,000.29

Workers will pay more

Employers are passing more of these costs to workers. Marsh found that 59% plan cost-cutting benefit changes for 2027, including higher deductibles that raise out-of-pocket costs. About two-thirds of large employers expect to increase workers' share of premiums.31 As a result, many workers' paycheck deductions could rise faster than the 8.2% average increase in total costs.6 Cancer patients feel these increases most, because cost-sharing hits hardest when someone needs a lot of care.

There is a risk this backfires. Some younger, healthier workers are already dropping employer coverage for cost-sharing arrangements, limited-benefit plans or no insurance at all. That can leave a sicker pool of members and push premiums higher for everyone who stays.25 With cancer increasingly hitting the same younger workers, those who opt out may face the highest risk if they are later diagnosed.

What employers are trying

Employers are focusing more on where workers get care. Roughly half planned to steer workers to cancer centers of excellence in 2026, and another 23% planned to do so by 2028.16 In Marsh's survey, guiding members to higher-quality care moved from fifth into the top three priorities. Managing high-cost claims remains the top priority.3 Employers also widely promote earlier detection, since diagnosing cancer even one stage earlier can lower costs and improve survival. Evernorth notes, however, that covering screenings has not been enough to get everyone screened.24

These steps make sense, but they mostly limit the damage rather than change the underlying trend. A center of excellence can negotiate a better rate. It cannot undo hospital consolidation, the cost of 340B-driven site-of-care shifts, or six-figure launch prices for new drugs. Until hospital prices and specialty drug prices are dealt with directly, cancer is likely to stay at the top of employer cost lists, and workers will keep absorbing more of the bill.