Employer Healthcare Costs Set for Biggest Jump Since 2003 in 2027

Workers are about to pay more, and not only through premiums

Americans with health insurance through work are heading into open enrollment as costs speed up. The consulting firms that track employer health spending all expect 2027 to be the worst year in about two decades. They disagree on the exact number, but every forecast points the same way. Workers will pay more through bigger paycheck deductions, higher deductibles and smaller raises.

WTW put the largest figure in public view. Employers in its survey expect health costs to rise 11.1% next year, which would be the biggest annual increase in more than 20 years.8 A WTW population health leader called the trend "utterly unsustainable" in an exclusive Wall Street Journal report.1 Aon forecasts a 9.5% rise, which would push average spending above $19,000 per employee. Aon says this would be the fourth straight year of increases near double digits.23 Marsh, the firm formerly known as Mercer, projects 8.2% from preliminary responses of more than 1,800 employers. That would be the steepest rise since 2003 and the fifth straight year of elevated growth.7 The Business Group on Health found a median expected increase of 9.2%, easing to about 8% after benefit changes.10

About 166 million Americans under 65 get coverage through an employer.14 That makes this one of the biggest pocketbook stories of the year, and it lands just before the 2026 midterm elections, when health costs already rank among voters' top economic worries.23

Why the forecasts differ, and why the gap matters

The estimates look far apart, but most of the difference comes from what each one measures. Aon says its 9.5% figure assumes employers change nothing. Aon expects many employers to make changes that bring the real increase down.3 Marsh's 8.2% already includes those changes. Employers in that survey said their current plans would cost about 11% more if they did nothing.7 Measured the same way, the forecasts are closer than the headlines suggest. Before cuts, the trend is roughly 9.5% to 11%. After cuts, it is roughly 8%.

The gap between those two numbers deserves more attention than it gets. The difference between the before-cuts and after-cuts figures is benefits that workers lose: higher deductibles, narrower networks and dropped coverage.5 Marsh found that 59% of employers plan cost-cutting changes for 2027, and raising deductibles is the most common choice.14 So the lower, more widely quoted forecast is not a sign of relief. It already assumes workers will absorb more of the cost.

The forecasts may also be too low. The Business Group on Health says employers have underestimated their actual medical spending in each of the past three years, and each miss was bigger than the last. Its chief executive warned that the forecasts for 2026 and 2027 may be too optimistic.10 On balance, the 11.1% figure looks less like an outlier and more like a realistic worst case.

How the bill reaches workers

The figures above are employers' total costs, not what workers pay. Coverage is consistent on how employers will pass costs on. Marsh found that about two-thirds of employers with 500 or more workers expect to raise employees' share of premiums.16 That means many paycheck deductions could rise faster than the 8.2% average.17 A Stanford researcher who studies employer coverage says the easiest way for employers to slow their own cost growth is to shift more of it onto employees.20

That shift is already happening. Aon estimates the average covered employee will spend $5,297 on health care in 2026, up 7.9% from 2025. That includes $3,130 in premium contributions and $2,167 in out-of-pocket costs.3 Out-of-pocket spending rose fastest, by 10.2%. Aon links that to people using more care and enrolling in leaner plans.3 Aon expects workers' costs to rise at a similar pace in 2027.15

KFF's benchmark survey shows how heavy the load already is. In 2025, family premiums averaged $26,993. Workers paid $6,850 of that and employers paid the rest.2229 Workers at small firms pay much more toward family coverage: $8,889 on average, versus $6,227 at larger firms.22 More than a third of covered workers now have a deductible of $2,000 or more for individual coverage, a share that has grown 77% over ten years.24 For 2027, the legal cap on out-of-pocket spending rises to $12,000 for an individual and $24,000 for a family. That cap applies to job-based plans as well as marketplace plans.17

The least visible cost is lost wages. Employer premium payments are money that could otherwise go into pay. The Congressional Budget Office calculates that wages and salaries fell from 91% of total worker pay in 1960 to an average of 82% over the past decade, largely because employers' health contributions grew.11 A survey by the National Alliance of Healthcare Purchaser Coalitions found that 83% of employers expect rising health costs to force tradeoffs with raises.4 Many workers will feel 2027's increase in a smaller raise as well as in their deductions.

Hospitals are central to the problem

GLP-1 weight-loss drugs get the most attention, and they matter. Marsh estimates rising GLP-1 use adds about one percentage point to cost growth in 2027.7 But that leaves most of the increase to other causes. Hospital pricing and billing practices account for much of it.

Employers point to rising hospital prices driven by consolidation. The Business Group on Health highlights hospital systems buying up independent doctors' offices, which lets them charge extra facility fees and raises the cost of claims.10 Marsh notes that health systems that merge into fewer, larger groups gain leverage when they negotiate prices with insurers.6 Marsh also describes cost-shifting. When government payments do not keep up with inflation, providers try to recover the shortfall and the cost of unpaid care from private plans.6

AI billing tools are a newer source of cost. Aon says AI-assisted documentation and coding has raised billed charges in some cases.3 Marsh says this software has led to more claims and higher-level claims.6 In the Business Group on Health survey, 64% of employers said AI-driven revenue tools at providers have affected their costs.10 The No Surprises Act was meant to protect patients from surprise bills, but billing disputes under it have run well above what was expected, and those costs reach employer plans too.610

Policy changes add to the pressure. Employers expect Medicaid cuts and the end of enhanced Affordable Care Act subsidies to raise the number of uninsured people. The Business Group on Health estimates this adds about 2 percentage points to employers' medical cost growth, as hospitals recover unpaid care from privately insured patients.10 In this sense, workers with job-based coverage end up paying for gaps elsewhere in the system.

No part of the market is spared

The employer increases come as every other type of coverage gets more expensive too. ACA marketplace insurers have proposed increases averaging about 15% for 2027, on top of roughly 20% this year.12 Some Medicare beneficiaries face changes to drug-plan premiums.12 Even health care workers are feeling it. A Boise nurse practitioner told reporters her employer plan's monthly family premium rose from $700 to $1,500.16

Employers are still committed to offering coverage, but they are changing how they do it. The share of employers covering GLP-1s for obesity fell from 72% to 60% in a year, and none of the surveyed employers plan to add that coverage.10 Ninety-two percent expect to use at least one value-based approach, such as high-performance networks, by 2027. About a third expect to have a transparent pharmacy benefit manager in place.10

These steps may slow growth at the margins. Industry leaders are blunt that they do not solve the problem: Gallagher's U.S. benefits chief said raising premiums and deductibles every year is itself unsustainable.2 Employers keep underestimating their costs, and hospital pricing power keeps growing. Nothing in the 2027 forecasts suggests this is a one-year spike. Workers should look past the monthly premium during open enrollment and plan for the full cost, including a deductible that may now be much higher.