- Average employer healthcare costs are projected to reach more than $19,000 per employee in 2027 — a 9.5% increase year over year — according to a new Aon study, marking the fourth consecutive year of near-double-digit healthcare inflation and extending what Aon describes as “one of the most sustained periods of health care inflation employers have faced in decades”; cost increases have more than doubled over the last few years, rising from 3.7% in 2022 to 8.8% in 2026 and now projected at 9.5% in 2027.
- Employees are absorbing a growing share of the burden despite employers covering more than 80% of plan costs: in 2026, employees will pay an average of $5,297 for coverage (up 7.9% from 2025), with payroll contributions rising 6.4% to $3,130 and out-of-pocket expenses jumping 10.2% to $2,167 — the out-of-pocket increase driven by greater utilization of healthcare services, enrollment in leaner plan designs, and more detailed clinical billing documentation enabled by AI-powered coding tools.
- The primary drivers of medical cost inflation are structural and accelerating: chronic disease prevalence has increased high-cost claims, specialty medications are being adopted at scale, and GLP-1 therapies (Ozempic, Wegovy) are creating a new cost category for employers who cover them — forcing a fundamental tradeoff between healthcare access and long-term affordability that Aon describes as a strategic, not just budgetary, challenge.
- The corporate response is shifting costs to employees: nearly half of US employers with 500+ employees plan to restructure 2027 plan offerings to put more costs on workers (Mercer), and 83% of employers say rising healthcare costs will force tradeoffs with wage and salary increases (National Alliance of Healthcare Purchaser Coalitions) — creating a direct link between healthcare inflation and wage growth that has significant implications for workers’ real compensation and for the inflation data the Fed will be tracking through 2027.
What Happened?
Professional services firm Aon released a study projecting that average employer healthcare costs will reach $19,000+ per employee in 2027, a 9.5% year-over-year increase. The study covers 700+ US employers. Key drivers include chronic condition prevalence, specialty drug adoption, GLP-1 therapies, and — notably — AI-enabled clinical documentation that supports “more detailed clinical documentation and coding,” resulting in higher bills. This is the fourth consecutive year that cost increases have approached double digits. Aon Chief Actuary Debbie Ashford said: “The organizations best positioned for the future will be those that can proactively identify emerging risks and take targeted action before costs escalate.”
Why It Matters?
Healthcare costs at $19,000 per employee annually are a significant drag on corporate margins and a constraint on wage growth. The 83% of employers saying healthcare costs force wage tradeoffs is the most economically significant data point in the report: it means healthcare inflation is directly suppressing real compensation, creating a channel through which medical cost inflation amplifies broader worker financial pressure even when nominal wages are rising. For investors, this has implications for consumer spending (workers with higher out-of-pocket medical costs have less discretionary income), for corporate margins in labor-intensive industries, and for the long-term viability of employer-sponsored insurance as the primary US healthcare financing mechanism. GLP-1 drugs specifically represent a rapidly growing cost category with genuinely uncertain long-term economic impact — employers covering these drugs face near-term cost spikes but potentially long-term savings from reduced comorbidities.
What’s Next?
The 2027 plan design decisions being made by employers right now (shifting costs to workers, adopting leaner plan options) will show up in workers’ healthcare spending in 2027 — adding to the out-of-pocket cost trajectory Aon is projecting. Watch for how major employers communicate their 2027 benefits changes during open enrollment season (typically October-November), and track whether GLP-1 coverage decisions by large employers stabilize or continue to be revised. The intersection of healthcare cost inflation with the Fed’s PCE measure is also worth monitoring: healthcare services are a meaningful PCE component, and persistent medical cost inflation is one reason PCE has remained above 3% even as goods inflation has moderated.
Source: Healthcare Dive
