Summary

Explore 2027 healthcare cost projections from major research firms. Learn how high rates will impact employers and how plan design changes can control costs.

Major benefits consultancy and research organizations that track healthcare costs have reached a similar conclusion for 2027. The increase employers should expect is not a routine uptick but one of the steepest single-year jumps in nearly two decades, with most projections landing in the 8%-12% range, and it’s arriving on top of several years of compounding costs that have already outpaced general inflation.

This article highlights industry projections for healthcare costs in 2027 and what it means for employers.

Projections for 2027

The projections vary somewhat by methodology and population studied, but they cluster in an elevated range. Consider the following 2027 industry projections:

• Aon—An analysis of 1,100 S. employers representing 7.9 million employees projects a 9.5% increase in average healthcare cost per employee for 2027, following an 8.8% increase in 2026 that brought that figure to $14,432.
• Business Group on Health (BGH)—The 2027 Employer Healthcare Strategy Survey, covering 127 employers and roughly 7 million Americans, found employers project a median 9.2% increase in health costs for 2027 before any plan changes are applied.
• KFF—For small employers specifically, insurers have requested a median 14% premium increase for 2027 small group plans, with most insurers requesting increases between 10% and 20% and six insurers requesting more than 30%.
• PwC—The Health Research Institute, surveying actuaries at 27 health plans covering more than 103 million employer-sponsored members, projects group medical cost trend at 9% for 2027, the highest level in 17 years.
• WTW—The 2026 Best Practices in Healthcare Survey, covering 471 respondents and 7 million employees, found an underlying trend of 1% for the coming year. This is the highest figure WTW has recorded in nearly 20 years, before employers apply any cost containment measures.

Each of these figures sits well above general inflation, and the BGH notes that cumulative healthcare cost growth across 2026 and 2027, combined with prior years, amounts to a 76% increase over the past decade, more than double the rate of broader price inflation over the same period.

Costs Before and After Plan Design Changes

One distinction is noteworthy when comparing these figures. Most of the numbers above represent trend before an employer applies any cost containment strategy, not the number that ultimately shows up in next year’s budget. The BGH survey found that its 9.2% median projection falls to roughly 8% once employers factor in plan design changes (e.g., higher employee cost sharing, narrower provider networks and updated eligibility rules) already underway. WTW’s research shows an even larger gap, with employers expecting to pull the underlying 11.1% trend down to 9.7% through measures such as vendor changes, eligibility adjustments, and cost-sharing shifts.

That gap is relevant to how these figures should be applied internally. The headline trend number illustrates the scale of pressure facing the healthcare system as a whole, but the figure employers should budget against is typically several points lower once their own plan design, network strategy and vendor management are factored in. Even after that adjustment, however, nearly every organization tracking this data agrees that 2027 will bring a larger increase than employers have budgeted for in most of the past 15 years.

Employer Costs vs. Employee Costs

Employers continue to shoulder the majority of health plan costs, though the specific split varies by data source and plan type. Aon’s research found that average premium contributions from employee paychecks rose 6.4% to $3,130 in 2026, a smaller dollar increase than the $14,432 average total plan cost per employee, meaning employers absorbed a larger share of the increase in dollar terms. This is consistent with data from the U.S. Bureau of Labor Statistics, which has consistently found that private industry employers pay roughly 80% of the single-coverage premium, with employees covering the remaining 20%.

That split has held relatively steady even as total costs climb, which creates the central tension for benefits leaders heading into 2027. Absorbing 80% of a 9% increase represents a materially larger dollar commitment than absorbing 80% of a 5% increase, even when the percentage split itself does not change. As a result, a growing share of employers are reconsidering other cost-sharing elements, including deductibles, out-of-pocket maximums and eligibility criteria, a topic significant enough to warrant its own dedicated discussion separate from the trend figures covered here.

What’s Driving the Increase?

The organizations behind these projections point to a consistent set of factors, several of which compound one another. Pharmacy spending, already about one-fourth of total healthcare spending, is projected by the BGH to rise 12% in both 2026 and 2027, driven substantially by specialty medications and continued growth in prescribing of glucagon-like peptide-1 (or GLP-1) drugs. Provider and hospital consolidation continues to reduce the alternatives available to health plans, reinforcing reimbursement pressure. Behavioral health utilization has surged, with inpatient claims up nearly 80% and outpatient claims up nearly 40% between January 2023 and December 2024, according to PwC’s research. Cancer care remains, for the fifth consecutive year, the single largest driver named by employers, cited by 70% of respondents to the BGH survey in 2026, up from 58% the year before. Artificial intelligence (AI) tools that help providers document care more specifically are also contributing, with nearly 70% of health plans in PwC’s survey naming AI-enabled coding among their top three trend inflators, and the No Surprises Act’s arbitration process continuing to add measurable cost, with 2.6 million disputes filed in 2025 and providers prevailing in around 85% of them.

What Does This Mean for Employers?

A trend this consistent across independent sources leaves little room to treat 2027 as an outlier year that will pass without action. Organizations preparing their budgets and open enrollment strategy should expect the increase to exceed the mid-single-digit range that has become familiar in prior years and should plan renewal conversations, vendor negotiations and internal budget approvals accordingly. The gap between pre-intervention trend and post-intervention cost also suggests that organizations with an active, ongoing cost management strategy, rather than one revisited only at renewal, are better positioned to close that gap than those relying on a single annual negotiation.

Summary

Healthcare costs are projected to rise faster in 2027 than they have in most of the past two decades. Employers continue to absorb the larger share of that increase in dollar terms, and the gap between the headline trend figure and what employers actually pay after plan changes remains the single greatest source of control organizations have over the outcome. Understanding where an organization sits within these figures is the necessary first step before deciding what to do about it.

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