Key facts
- U.S. employer health care costs are projected to rise 9.5% in 2027, according to Aon.
- This is the fourth consecutive year of near double-digit increases.
- Employers are absorbing approximately 82% of health plan costs.
- Employees are expected to spend an average of $5,297 on health care in 2026.
- The Business Group on Health surveyed 127 employers covering 8.7 million Americans.
- Cumulative healthcare costs are expected to have increased 76% over the past decade.
U.S. employer health care costs are projected to rise 9.5% in 2027, according to a new Aon report. This marks the fourth consecutive year of elevated cost trends approaching double digits, driven by increasing utilization of health care services, a rise in chronic conditions, and growing numbers of high-cost claims. Prescription drug spending, particularly specialty medications and GLP-1 therapies, also significantly contributes to the rising costs. Additionally, providers' adoption of technologies like AI for clinical documentation and coding is contributing to higher billed charges.
Mike Pasterick, North America Health Solutions Leader for Aon, noted that at this level, rising health care costs influence organizational decisions beyond budgeting, impacting benefits strategy, employee affordability, and broader workforce and financial planning. Employers are facing pressure to maintain affordable benefits while attracting and retaining talent.
Despite cost increases, employers continue to absorb most of the financial burden. Employer health care cost increases have more than doubled since 2022, with employers responsible for about 82% of plan costs. In 2026, employees are expected to pay an average of $5,297 for health care coverage, including premiums and out-of-pocket costs.
Research from the Business Group on Health (BGH) aligns with Aon's findings, projecting a median 9.2% increase in health costs for 2027. The BGH survey, which included 127 employers covering approximately 8.7 million Americans, also noted that employers have underestimated actual medical spend for the past three years, suggesting that forecasts for 2026 and 2027 might be too optimistic. Ellen Kelsay, president and CEO of BGH, stated that cumulative healthcare costs will have jumped 76% over the past decade, more than double the rate of general inflation.
Experts are concerned that employers may be facing a new normal of surging healthcare spending that outpaces economic growth, potentially rendering existing forecasting and budgeting strategies inadequate. Employers are reconsidering benefit offerings, including trimming benefits and cutting vendors, as they grapple with affordability challenges and re-evaluate their role as the backbone of the U.S. insurance system.