A survey of employers predicts the largest increase in healthcare costs in over 20 years in the United States. Factors driving this growth include increased usage of expensive weight loss drugs and healthcare facilities using artificial intelligence tools to submit more claims.
Released by consulting firm Marsh on August 31, the report reveals that employer-sponsored health benefit costs are expected to rise by an average of 8.2% in 2027, marking the largest increase since 2003.
About two-thirds of large employers plan to increase the portion of premiums employees are responsible for next year. Additionally, many employers are considering raising deductibles and implementing other changes to further increase employees’ out-of-pocket expenses.
Marsh indicates that this means many employees may see healthcare costs deducted from their wages exceeding the overall average level of 8.2% increase.
Despite employers planning cost-containment measures, expenses continue to soar. Employers told Marsh that if they took no action to control expenditures, maintaining existing plans’ costs would rise by an average of 11%.
The 2027 forecast marks five consecutive years of high growth in healthcare benefit costs following 10 years of more moderate annual increases. The predicted increase for 2027 is the highest in five years, exceeding the 6.7% increase seen in 2026.
The above survey results are based on feedback from over 1,800 employers.
Some of the most significant drivers of cost increases stem from long-standing trends, including advancements in diagnostic tools and treatment techniques. New therapies, especially those for cancer and rare diseases, offer better outcomes but often come at a higher cost than traditional treatments.
Ongoing mergers of healthcare facilities lead to larger institutions negotiating with insurance companies, enhancing their bargaining power and subsequently raising medical fees.
Moreover, government funding for healthcare has failed to keep pace with inflation. Healthcare facilities need to compensate for deficiencies in public reimbursement and respond to rising uncompensated care costs, putting greater pressure on their health insurance plans.
The report’s authors wrote: “Several newer cost-driving factors are intertwining to push cost increases to levels unseen in recent years.”
Marsh attributes one percentage point of the forecasted increase to the growing prevalence of GLP-1 weight loss drugs, which impose a significant financial burden on employers providing related coverage. Some employers have opted to eliminate this coverage next year, while others are promoting the adoption of lower-cost GLP-1 biosimilars.
Another percentage point increase results from healthcare facilities increasingly using artificial intelligence software to document care processes and submit claims. These tools lead to a rise in the number of submitted claims and an increase in the percentage of claims charged at a higher rate.
The No Surprises Act’s dispute resolution mechanism has also contributed to an increase of up to one percentage point. Enacted in 2022, the Act aims to protect patients from unexpected out-of-network medical billing impacts, but it has sparked a surge in payment disputes between healthcare facilities and insurance companies.
Marsh notes that the number of dispute cases and the amounts awarded to healthcare facilities far exceed expectations.
According to Marsh’s survey, 59% of employers plan to reduce their health benefit costs in 2027, which includes raising deductibles to shift more costs onto employees.
Predictions from other consulting firms are even higher. Aon forecasts that healthcare costs for employers in the US will rise by 9.5% in 2027, pushing average costs per employee beyond $19,000, marking nearly four consecutive years of close to double-digit growth.
PwC predicts that commercial medical plan costs will increase by 9%, setting a record for the highest medical cost growth in 17 years. Around 70% of medical plans consider the use of artificial intelligence tools by healthcare facilities as one of the top three cost-driving factors.