2027 Healthcare Cost Projections: What Employers Should Expect
Industry forecasts point to one of the steepest healthcare cost jumps in nearly two decades. Here's how plan design changes can shape what your organization actually pays.
Nearly every major benefits consultancy and research group tracking employer healthcare costs has reached the same conclusion for 2027. Most project increases between 8% and 11%, among the largest single-year jumps in close to 20 years. That increase also builds on several straight years of cost growth that has outpaced general inflation.
Here's a look at the latest 2027 healthcare cost projections, what's behind them, and what they could mean for your benefits budget.
How Much Will Healthcare Costs Rise In 2027?
Most 2027 projections fall between 9% and 11% before employers make any plan changes. Small employers buying fully insured coverage could see even higher increases. Here's how the leading sources compare:
Aon: An Aon analysis of more than 1,100 U.S. employers covering 7.9 million employees projects a 9.5% increase in 2027, pushing average costs above $19,000 per employee.
Business Group on Health (BGH): The BGH 2027 Employer Healthcare Strategy Survey of 127 employers covering 8.7 million employees found a median projected increase of 9.2%.
PwC: PwC's Behind the Numbers 2027 report, based on input from actuaries at 27 health plans, projects group medical cost trend of 9%, the highest in 17 years.
WTW: A preview of WTW's 2026 Best Practices in Healthcare Survey of 471 employers representing 7 million employees projects an 11.1% increase, the steepest in nearly two decades.
KFF: According to KFF's analysis of 2027 small group rate filings, insurers requested a median 14% premium increase, with 59% seeking increases between 10% and 20%.
BGH also notes that, counting its 2026 and 2027 projections, healthcare costs could rise a cumulative 76% from 2018 to 2027. That's more than double the roughly 32% rise in general inflation over a similar period.
Why Plan Design Changes Matter
Most of these figures reflect cost trends before an employer takes any action. They aren't necessarily the number that lands in next year's budget.
BGH found its 9.2% median drops to about 8% once employers factor in plan design changes. WTW's research shows a similar pattern, with employers expecting to bring the 11.1% trend down to 9.7%. Common levers include:
Adjusting deductibles, copays, and out-of-pocket maximums.
Narrowing provider networks.
Reviewing dependent eligibility.
Changing pharmacy formularies or vendors.
The headline trend shows the pressure on the healthcare system as a whole. The figure your organization budgets against will typically be lower once your own plan design, network strategy, and vendor management come into play. Even so, 2027 is likely to bring a larger increase than most employers have planned for in years.
Employer vs. Employee Healthcare Costs
Employers continue to carry most of the cost. According to Aon, average employer costs rose 8.8% to $14,432 per employee in 2026, while employee paycheck contributions rose 6.4% to $3,130. Employers covered about 82% of total plan costs.
Federal data shows a similar split. The U.S. Bureau of Labor Statistics (BLS) reports that private industry employers pay about 80% of single-coverage premiums and 68% of family-coverage premiums.
Why does that matter if the split stays the same? Because absorbing 80% of a 9% increase is a much larger dollar commitment than absorbing 80% of a 5% increase. That's leading many employers to take a closer look at cost-sharing and plan design options heading into renewal.
What's Driving Healthcare Costs Higher?
The organizations behind these projections point to several factors that tend to build on one another:
Pharmacy spending: Pharmacy costs make up about 25% of employer healthcare spending, according to BGH, fueled by specialty drugs and growing use of glucagon-like peptide-1 (GLP-1) medications.
Cancer care: For the fifth straight year, employers named cancer as their top cost driver. Seventy percent of BGH respondents cited it, up from 58% the year before.
Provider consolidation: PwC notes that hospital and provider consolidation limits health plans' alternatives and keeps reimbursement pressure high.
Behavioral health: PwC reports behavioral health use continues to grow faster than overall medical trend.
AI-enabled coding: Seventy percent of health plans in PwC's survey ranked artificial intelligence (AI) documentation and coding tools among their top three cost inflators.
Surprise billing disputes: PwC also identifies the No Surprises Act's independent dispute resolution (IDR) process as a growing cost driver, with 2.6 million disputes filed in 2025.
What Does This Mean For Employers?
With independent sources this consistent, 2027 is unlikely to be an outlier year that passes on its own. As you prepare budgets and open enrollment, consider planning for an increase above the mid-single digits and starting renewal and vendor conversations early. Organizations that manage costs year-round, rather than only at renewal, are generally better positioned to close the gap between headline trend and what they actually pay.
Plan Your 2027 Strategy With Confidence
Understanding where your organization falls within these projections is the first step toward deciding what to do about them. Contact The Siekmann Company to talk through your 2027 renewal and plan design options with our team.
Frequently Asked Questions
How much will employer healthcare costs increase in 2027?
Most major projections range from 9% to 11% before plan changes, with Aon at 9.5%, BGH at 9.2%, PwC at 9%, and WTW at 11.1%. Small group insurers have requested a median 14% increase.
What's the difference between cost trend and actual cost increase?
Cost trend is the projected increase before an employer makes changes. The actual increase reflects plan design, network and vendor decisions, and is often one to two percentage points lower.
