2027 Employer Healthcare Costs Projected to Grow up to 11%

Record healthcare costs are already here, and employers expect them to skyrocket even further due to the costs of catastrophic claims and specialty drugs, according to several recent reports.

According to Business Group on Health’s 2027 Employer Healthcare Strategy Survey, released today, employers predicted that healthcare cost increases next year will rise a median of 9.2%, but plan design changes could reduce that growth to about 8%. Employers surveyed also predicted the increase in 2026—yet to be seen—would come out to 8.5%, falling to 7% after plan modifications.

“While these elevated trends for 2026 are technically anticipatory numbers, we sit here today in August 2026,” said Ellen Kelsay, the Business Group on Health’s president and CEO, during a media briefing. “In most instances, employers have locked in their budgets and strategies for the next year. … In this regard, the numbers are not just hypothetical. Many employers won’t have room to make truly transformative moves until [the] 2028 [plan year] at the earliest, making evaluation, initiation and the urgency for change all the more necessary.”

When including predictions for 2027, costs were projected to rise by a cumulative 76% over the 10 years leading up to 2027, the survey found, more than double the rate of general inflation, which increased by approximately 32% from 2018 through 2026, Kelsay said during the briefing.

Reaching New Heights

Meanwhile, the International Foundation of Employee Benefit Plans’ Pulse Survey: 2027 Cost Trend found that employers predicted a median plan cost increase of 10% between 2026 and 2027, driven primarily by catastrophic claims (32%) and specialty prescription drugs (21%).

Aon PLC predicted last week that U.S. employer healthcare costs could rise by 9.5% next year—the fourth straight year of near-double-digit increases—before mitigation efforts, pushing average costs to more than $19,000 per employee for the coming year. In 2026, plan costs per employee are projected to total $17,562, up 8.3% from 2025. Employees are expected to cover an average cost of $5,297 for healthcare coverage—up from $4,909 in 2025—which includes both payroll contributions ($3,130) and out-of-pocket expenses ($2,167).

WTW anticipated an 11.1% increase in healthcare costs in 2027, without any plan design changes, dropping to 9.7% with plan design changes, according to a preview of the firm’s 2026 Best Practices in Healthcare Survey, first reported by digital publication CFO Dive.

Trending Upward

The Business Group on Health’s cost predictions follow three consecutive years during which actual healthcare costs exceeded employer projections. The gap between predicted and actual expenses increased each year between 2023 and 2025.

“Employers’ ability to accurately predict their healthcare costs is not just a budgeting problem,” Kelsay said during the Business Group on Health briefing. “It’s emblematic of a bigger-picture issue with the overall healthcare system.”

For the fifth year in a row, respondents to the Business Group on Health’s survey named cancer as the top condition (70%) driving up their healthcare spending, up from 58% who said so last year. Almost all employers surveyed (92%) categorized cancer as one of the three most expensive conditions fueling their higher costs, while musculoskeletal (68%) and cardiovascular (37%) conditions ranked second and third, respectively.

Employer respondents to the Business Group on Health Survey said pharmacy costs have represented 25% of their healthcare spending this year. Cancer (92%), musculoskeletal (68%) and cardiovascular (37%) conditions were the three most costly conditions, consistent with last year’s survey results.

Respondents to the IFEBP survey who said specialty and costly prescription drugs were their primary cost drivers named the following as the medications costing them the most: GLP-1 drugs (67%), autoimmune and inflammatory therapies (54%), cancer drugs (42%), and cell and gene therapy (21%).

When asked what types of initiatives would be the most effective in managing costs for 2027, respondents to the IFEBP survey named:

• 19%—Cost-sharing initiatives with plan participants, such as coinsurance, copays, deductibles and premium contributions;
• 15%—Plan design initiatives, including audits or dependent eligibility, high-deductible health plans, spousal surcharges/carve-outs and formulary changes;
• 14%—Utilizing purchasing/provider initiatives, such as telemedicine, price transparency tools, centers of excellence, health care navigators/advocates, coalitions and quality initiatives;
• 13%—Service utilization control initiatives like prior authorization, case management, disease management and nurse advice lines; and
• 11%—Administration/data analysis initiatives, including claim audits, utilization review and predictive modeling.

The Business Group on Health’s survey was fielded in June among 127 employers covering 8.7 million employees in the U.S.

WTW surveyed 471 employers with 100 to 25,000 workers, collectively representing 7 million employees, between June and August.

Aon collected responses from more than 1,100 U.S. employers representing 7.9 million employees but did not reveal the specific dates it conducted the research.

The IFEBP surveyed 112 U.S. employers in July and August.