Health Insurance Costs Set for Biggest Jump Since 2003 in 2027

The health bill is the one still speeding up

For the past three years, American households mostly blamed their car and home insurance for rising bills. In 2027 the pressure moves to health coverage. Workers who get insurance through their jobs are about to absorb what most forecasters expect to be the steepest one-year rise in employer health costs in roughly two decades. Auto and home premiums, meanwhile, are rising more slowly after a punishing run.

The forecast most outlets lead with comes from a preliminary survey of more than 1,800 U.S. employers. It projects that total health benefit costs per employee will climb 8.2% on average in 2027. That would be the biggest increase since 2003 and the fifth straight year of above-normal growth.11 The same survey found that costs rose an average of 8.8% from 2025 to 2026, so 2027 piles onto an already high base.13

Outlets don't agree on who produced the survey. Fortune and several others credit Mercer1113, while NBC News and some follow-up coverage credit Marsh1518. The figures match exactly, so this looks like one dataset reported under two corporate names, not two separate studies.

Every forecast is high, but they don't match

The forecasts vary in size but all point the same way. Aon surveyed 1,100 employers and projects a 9.5% rise in average cost per employee. The Business Group on Health puts the median at 9.2% before any plan changes. PwC's Health Research Institute expects a 9% group medical cost trend, its highest in 17 years. WTW recorded an underlying trend of 11.1%, the highest it has measured in nearly 20 years.12 For small businesses, insurers have asked for a median 14% premium increase on 2027 small-group plans, and six carriers want more than 30%.12

The forecasts differ mainly because they measure different stages of the same process. Some numbers show costs before employers react, and others show costs after. The 8.2% figure already counts cuts employers plan to make, and without them the same plans would cost about 11% more.13 The Business Group on Health expects its 9.2% median to fall to about 8% after plan redesigns, and WTW expects employers to pull 11.1% down to 9.7%.12 Put simply, about three percentage points of cost growth aren't being eliminated. They're being moved somewhere, mostly onto workers.

One detail doesn't fit. A trade summary puts Aon's 2026 average cost per employee at $14,432.12 Medical Daily, citing The Hill, says Aon's 9.5% projection would push spending above $19,000 per employee.16 The two may describe different measures, but readers should be careful with the dollar figure. The percentage is more reliable.

How the cost reaches workers

The key point for households is that an 8.2% rise in what employers spend doesn't translate one-for-one into an 8.2% rise in paycheck deductions. It could be smaller, or it could be larger. A Stanford medicine professor who studies employer coverage told NBC News that companies have several options: raise employee premiums, raise deductibles, trim benefits or slow raises.15 He was blunt about it, saying the easiest way for employers to slow their own cost growth is to push more of it onto employees.18

Employers say they will use most of those options at once. About two-thirds of employers with 500 or more workers expect to raise the employee share of premiums in 2027.14 Fifty-nine percent plan broader cost-cutting changes such as higher deductibles, and 48% of large employers expect to raise deductibles or copays specifically.14 Because of this, coverage of the survey warns that some workers' deductions could grow faster than the 8.2% headline.16

The starting point is already high. In 2025, family premiums for job-based coverage averaged $26,993, up 6% while inflation ran at 2.7%. Workers paid $6,850 of that directly.2 That was the first time in twenty years that family coverage costs rose 6% or more three years in a row.4 KFF estimates that a family premium now equals more than 40% of a typical full-time worker's roughly $62,000 annual earnings.3 Workers at small firms pay much more: those at companies with 10 to 199 employees contributed an average of $8,889 toward family coverage, compared with $6,227 at larger firms.2

There is also a less visible cost. Economists generally treat employer health spending as part of total pay, so faster growth in benefits can mean slower wage growth. The Congressional Budget Office has found that wages fell from 91% of total compensation in 1960 to about 82% over the past decade, driven largely by employer health contributions.11 The paycheck deduction is the visible part. Raises that never happen are the part workers don't see.

Federal rules have also raised the ceiling on what households can owe. For 2027, the maximum out-of-pocket limit on non-grandfathered plans rises to $12,000 for individuals and $24,000 for families, up from $10,600 and $21,200. That cap applies to job-based plans as well as marketplace plans.16

What's pushing costs up

Coverage broadly agrees on the causes. Provider consolidation, less government health spending, expensive new cancer treatments, GLP-1 weight-loss drugs and AI-enabled medical billing all appear on the list. Mercer's chief actuary estimates GLP-1 drugs alone add about one percentage point to 2027 cost growth.11 Employers named cancer care their top cost driver for the fifth year in a row.17 Rising numbers of uninsured people also push unpaid care costs onto people who have insurance.13

AI billing is the newest and probably most contested factor. According to PwC, nearly 70% of health plans it surveyed ranked AI-assisted documentation and coding among their top three cost drivers for 2027. These tools help providers record more billable detail without necessarily changing the care itself.17 Insurers and hospitals will argue about whether that counts as more accurate coding or upcoding. Either way, it means software is now a cost driver in its own right.

Marketplace and Medicare enrollees are hit too

People who buy their own coverage face a second straight year of double-digit increases. KFF's review of filings found ACA marketplace insurers proposing an average increase of about 15% for 2027, after rates rose about 20% in 2026.15 A person earning $80,000 who doesn't qualify for subsidies could pay about $80 more a month for a bronze plan, nearly $1,000 a year.15 For Medicare beneficiaries, the Part D out-of-pocket cap rises to $2,400 and the standard deductible to $700.16

Auto and home: high costs, slower increases

Auto and home insurance show the opposite pattern. Costs there are high, but the increases are shrinking. NerdWallet's analysis of more than 1.4 billion auto rate estimates found the median full-coverage premium rose 32.3% from January 2023 to January 2026, from $1,784 to $2,359. However, the annual increases slowed from 13.8% and 13.2% in the first two years to just 2.6% in the latest year. For the second year in a row, most insurers filed for no rate change.22 Midwestern drivers were hit hardest, with Minnesota leading at 56.9% over three years.22

Home insurance looks similar. NerdWallet puts the typical premium 24% above early-2023 levels at $2,564, but the latest annual increase was only 4.6%.21 Rate filings through mid-August 2026 asked for a median change of just 1%.21 Insurify reports a 12% jump in 2025 followed by a 2.2% rise in the first half of 2026.30 The national averages differ by source: $2,564 from NerdWallet, $2,872 from Insurance.com and roughly $3,012 from Insurify.212430 Those differences mostly reflect different sample policies.

State-level figures differ even more, which suggests timing affects the numbers as much as method. Insurance.com reports Massachusetts premiums jumping 42.9% from 2025 to 202624, while Insurify shows them essentially flat in the first half of 2026.30 Both can be accurate if the increase happened before mid-year. Even so, homeowners shouldn't treat one dramatic statewide figure as a forecast. Local disaster risk still dominates. Florida averages $8,471 a year26, and some counties saw midyear increases of more than 20%, including Jefferson Parish, Louisiana, at 33%.30 Some carriers are even moving in opposite directions within one state. State Farm is cutting average auto rates in Illinois while raising home rates there.29

Why it matters

Taken together, the coverage suggests the household insurance squeeze isn't easing. It's moving. Auto and home premiums appear to be settling at higher levels after insurers caught up on claims costs. Health coverage is the one line still accelerating, and it's the one workers have the least control over, because employers make most of the decisions. Unlike a driver comparing car insurance quotes, a worker can't easily switch plans at open enrollment. The usual choice is between a higher paycheck deduction and a higher deductible.

The practical advice is the same across coverage. This fall, compare the per-paycheck premium and the deductible and out-of-pocket maximum against this year's plan, because a plan that looks unchanged can still cost more.14 The bigger issue is structural. Employers have announced several rounds of cost-shifting in a row, and nearly half of large employers already report that their workers are concerned about cost sharing.4 If forecasts of costs rising faster than wages hold true, the trade-off between health benefits and raises will become a bigger issue in pay negotiations and in politics.