The National Survey of Employer-Sponsored Health Plans each year analyzes responses on a survey to project health benefit cost increases for the upcoming year. Total health benefit cost per employee is expected to rise 8.2% on average in 2027 — the highest increase since 2003 — even after accounting for planned cost-reduction measures. Employers said that the cost of their current plans would increase by 11%, on average, if they took no action to lower it. Based on these projections, 2027 will be the fifth consecutive year of elevated health benefit cost growth after a decade of more moderate annual increases. It will also be the highest increase in this five-year period. The average projected increase for 2026 was 6.7%.
Some of the most significant cost pressures are ongoing. Advances in diagnostics and therapeutics, such as cancer treatments, produce better outcomes but typically cost more than the treatments they replace. The consolidation of providers into fewer, larger health systems and provider groups gives them considerable bargaining power when negotiating prices with insurers, contributing to higher charges. And when government funding for healthcare doesn’t keep pace with inflation, it puts more pressure on private health plan payors as providers seek to make up for lower public health plan reimbursements and more uncompensated care. While these cost pressures consistently keep medical cost trends above general inflation, this year, some newer cost drivers have combined to drive cost growth to a level not seen in decades. At the top of the list is GLP-1 medications for weight management. While the market for these medications is evolving in ways that could ultimately result in lower costs, some employers needing immediate cost relief chose to drop this coverage for next year. Still, the actuaries estimate that rising GLP-1 utilization accounts for a full percentage point of the overall cost growth for 2027. Two other recent developments are also driving the current spike in health benefit cost, each also adding as much as a percentage point to trend, according to the actuaries. One is the rapid adoption