US employer health benefit costs are projected to post their largest increase in more than 20 years in 2027, according to new research from consulting firm Marsh. The forecast would extend a period of elevated medical cost growth that has already lasted several years.
The 2027 increase would mark the fifth consecutive year of unusually strong health benefit cost growth following a decade of more moderate annual increases. It would also represent the steepest rise during the current five-year period.
Marsh projects employer health benefit costs will rise faster in 2027 than the 6.7% increase expected for 2026. The findings are based on responses from more than 1,800 employers.
Aon projects US employer healthcare costs will rise 9.5% in 2027, taking average annual spending above $19,000 per employee. The forecast extends a run of healthcare cost increases approaching double digits for a fourth consecutive year.
Employers have faced one of the longest periods of elevated medical cost growth in decades. Rising healthcare utilization remains a major source of pressure, alongside higher treatment costs linked to chronic conditions.
Fitch Ratings assigns a deteriorating outlook to the U.S. health insurance sector for 2026, citing sustained pressure from high medical costs, disruption tied to the year-end 2025 expiration of enhanced Affordable Care Act marketplace tax credits, and unresolved regulatory and policy risk.
Growing use of GLP-1 weight-loss drugs accounts for about one percentage point of the projected increase, according to Marsh. Employers that cover medications such as Wegovy face substantial additional pharmacy spending as utilization expands.
The cost effect has become more visible as GLP-1 prescriptions spread across employer-sponsored health plans. Higher drug spending adds to existing medical inflation and leaves companies with another expensive benefit decision ahead of annual plan renewals.
For employers, the projected increase raises pressure on healthcare budgets after several years of elevated spending. Companies will need to decide how much of the additional cost to absorb and how much to pass through to workers through payroll contributions or other plan changes.
The latest projection also shows that employer health costs have moved well beyond the slower growth rates common during the previous decade. The 2027 forecast would make the current period the most expensive stretch for annual benefit cost increases in more than two decades.
The employer-sponsored medical plan costs worldwide to climb 9.8% in 2026, according to Aon’s Global Medical Trend Rates Report. That projection marks a shift back to single-digit growth for the first time since 2023.
Large claims are also becoming more expensive and more frequent. Prescription drug spending adds another substantial expense as employers finance greater use of specialty medicines and GLP-1 therapies.
GLP-1 drugs are moving beyond their earlier use cases into cardiovascular disease and sleep apnea treatment. Chronic kidney disease represents another area of expansion, while emerging oral formulations are expected to widen access to these therapies.
That wider use comes with a larger benefits bill. Employers therefore face harder choices around access and affordability as drug spending consumes a growing share of health plan budgets.
