Employer Healthcare Costs to Rise 9.5% in 2027, Topping $19,000

A fourth straight year near double digits

Aon expects US employers to face another steep rise in health benefit costs. The firm projects that employer healthcare costs will rise 9.5% in 2027, which would lift the average cost per employee above $19,000.1 Aon describes this as the fourth consecutive year of increases approaching double digits.15 The forecast draws on Aon's Health Value Initiative database, which covers more than 1,100 US employers, 7.9 million employees and $135 billion in 2026 healthcare spending.13

The 9.5% figure needs a caveat that some coverage leaves out. It is a "status quo" projection, meaning it assumes employers change nothing in their plans and add no care-management programs.110 Aon's consultants expect many employers to make changes that pull the actual increase lower.10 Some benefits advisers therefore treat the number as closer to a ceiling than a forecast of what employers will actually pay.7

The ceiling is still high, and recent history shows how much of the pressure gets through. Aon says the annual increase in employer health costs more than doubled from 3.7% in 2022 to 8.8% in 2026.18 The 2026 figure was measured after employers had already changed plan designs.1 Aon also notes that 9.5% matches its projection for the year before, making 2027 the second year in a row at that level.2 The gap between a 9.5% projection and the 8.8% employers actually absorbed in 2026 suggests that cost-cutting moves trim the increase only modestly.

Who pays: employers carry most of it, workers feel it most

In 2026, the average employer cost rose 8.8% to $14,432 per employee. Employee premium deductions rose 6.4% to $3,130, and total plan cost rose 8.3% to $17,562.14 Employers covered about 82.2% of plan costs, slightly more than the year before.16 Averages hide a wide spread: the middle half of employers saw plan cost increases anywhere from 5.5% to 11.5%.1

For workers, the biggest increase showed up at the point of care. Out-of-pocket spending rose 10.2% to $2,167, faster than any other part of the cost picture, and total employee spending reached $5,297.15 Aon links the out-of-pocket jump to people using more care and to more workers enrolling in leaner plans.1 Those plans have lower premiums but more cost-sharing when care is used.8 The result is that more of the burden lands on people who are sick, even when the premium line on a paycheck looks manageable.

The pattern held across the economy. Employer cost increases ranged from 6.5% in healthcare to 9.8% in finance and insurance.36 Healthcare employers had the smallest increase of any sector, yet the industry that delivers the care is still facing rising costs to insure its own staff.

The rest of the forecasts point the same way

Aon is one of several firms projecting large increases, and they all point in the same direction. Mercer's survey of more than 1,800 employers, published through Marsh, projects an 8.2% rise in total benefit cost per employee in 2027 after planned changes. That would be the largest increase since 2003.1420 The same employers said costs would rise 11% if they did nothing.1920 WTW measures an underlying trend of 11.1% before cost containment, the highest it has recorded in nearly 20 years. Employers in its survey expect to bring that down to 9.7%.1218 Business Group on Health puts the median at 9.2% before plan changes and about 8% after.12 PwC projects 9% group medical cost growth, the highest in 17 years.812

The spread from 8.2% to 11.1% mostly reflects different methods, not disagreement. Some figures are measured before employers act and others after. The surveys also cover different groups: employers, health plan actuaries, and Aon's own claims database.1112 Lined up on the same basis, the numbers agree closely. Underlying cost growth is running around 9% to 11%, and employers expect to cut that by one to three percentage points through plan changes.

Smaller businesses face steeper increases. Insurers have asked for a median 14% increase on 2027 small-group premiums, with most requests between 10% and 20%.1218 An eHealth survey found that 73% of smaller employers are considering dropping traditional health insurance benefits in 2027.13 Business Group on Health estimates that healthcare costs will have risen a cumulative 76% from 2018 to 2027.18

Utilization or prices? Where the coverage diverges

The main disagreement is about causes. Aon's analysis argues that cost increases now come more from how much care people use and what kind, not just from higher prices.2 Its release points to more use of services, more chronic disease, a growing number of high-cost claims, and spending on specialty drugs and GLP-1 treatments.14

Other reporting puts more weight on hospital prices. PwC's actuaries rank provider payment pressure as the second-largest cost driver. They put hospital services inflation at 7.6% in early 2026 and note that hospital-physician integration is associated with 17% higher prices for office visits.21 STAT reported that a Banner Health facility in Arizona quoted an employer $232,000 for an outpatient knee surgery. Banner later called the quote a clerical error and revised it to just under $50,000, still almost five times what Medicare pays.22 STAT also reported that Anthem's broad-network plan pays nearly $100,000 for a major joint replacement at Sentara's flagship hospital, compared with $28,000 from Medicare.22 A Milliman actuary told STAT that hospital outpatient costs for workers and employers rose 8% in each of the past two years, driven largely by expensive cancer drugs given in those facilities.22

This article's reading is that Aon's focus on utilization is accurate but incomplete. Higher use of care and higher prices compound each other: each additional hospital visit costs more because commercial plans pay several times Medicare rates. Mercer's survey also lists higher provider charges and consolidation among the drivers. It adds that rising numbers of uninsured people shift unpaid care costs onto people with insurance.1413 For patients, the price side is the more visible one, because higher negotiated rates feed directly into the coinsurance they owe.

AI billing and GLP-1s: the newer pressures

Two newer cost drivers appear in almost every 2027 forecast. The first is artificial intelligence on the provider side. Aon says documentation and coding tools that capture care in more detail are leading to higher billed charges in some cases.14 PwC goes further and ranks AI-driven revenue optimization as the leading cost inflator for 2027. About 70% of the actuaries it surveyed put it in their top three.2112 Disputes under the No Surprises Act add to the pressure: 2.6 million were filed in 2025, and providers won about 85% of them.12

The second is GLP-1 drugs. Mercer estimates that rising GLP-1 use accounts for a full percentage point of 2027 cost growth.1520 Aon expects more pressure as the drugs gain approval for heart disease, sleep apnea and kidney disease, and as pill versions expand access.1 Business Group on Health found that nearly eight in ten employers say GLP-1s are raising their overall costs, and some are cutting back coverage for 2027.27

The evidence on whether the drugs pay for themselves is mixed. One report found a 59% drop in inpatient hospital costs among patients who kept taking GLP-1s. It also found that more than half of patients stop within a year, which makes long-term savings harder to count on.26 Cash prices have fallen from about $1,300 a month to around $199. One estimate puts the break-even point for net savings at about $170 per patient per month.28 Generic versions are not expected in the US before 2032 at the earliest.28 For now, employers are paying the upfront cost while the promised savings remain uncertain.

What comes next for workers

Employer responses are already taking shape. Mercer found that 59% of employers plan cost-cutting changes for 2027, including higher deductibles.1920 About two-thirds of employers with 500 or more workers expect to raise the share of premiums employees pay.1720 Aon says employers are relying more on data tools to examine network performance and utilization rather than simply shifting costs to workers.18 The survey results suggest both approaches are being used at once.

The overall direction is clear even if individual numbers vary. Employers will keep absorbing most of the increase, but workers will pay more through larger paycheck deductions, higher deductibles and leaner plans. Those choices will show up in open enrollment materials this fall.20 The forecasts do not show a policy or market change that would slow hospital prices, AI-assisted billing or specialty drug spending by 2027.