Employers' healthcare costs are projected to spike again in 2027, with Marsh (formerly Mercer) estimating an 8.2% increase—the highest since 2003.
Analysts project it will be the fifth consecutive year of increased costs after a decade of “more moderate annual increases,” as well as the highest increase in the five-year period. Projections are based on preliminary results of Marsh’s 2026 National Survey of Employer-Sponsored Heath Plans, drawing insights from more than 1,800 employers as of Aug. 10.
Moreover, employers estimate the cost of current plans would increase by 11% in 2027 if no actions were taken to mitigate their spending growth.
Cost drivers contributing to the projected spike include consolidations of providers, government funding not keeping pace with inflation, advanced treatments, artificial intelligence software of claims and GLP-1 medications, per the report.
“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,” analysts wrote. “Still, our actuaries estimate that rising GLP-1 utilization accounts for a full percentage point of the overall cost growth for 2027.”
Another driver of the costs is an “unintended consequence” of the No Surprises Act’s Independent Dispute Resolution (IDR) process.
Total costs associated with the IDR process hit $22.4 billion by the end of 2025, according to a recent analysis.
To mitigate higher costs, 59% of employers in Marsh’s survey report plan to make cost-cutting changes to health benefits next year, including plan design changes.
“Few organizations can absorb health cost increases that outpace inflation without making difficult financial decisions,” said Simon Camaj, Marsh U.S. health and benefits leader, in a statement.
Moreover, an August report from Aon found employers’ healthcare cost are expected to spike 9.5%, lifting the average costs to more than $19,000 per employee. The increase would make for the fourth straight year in which costs increased by or close to double digits, analysts noted.