Employer health costs: Why it could be another tough year
Summary
Employers face another year of rising health care costs, with expenses expected to increase by 9.5% in 2027. This rise is due to higher demand for medical services, more chronic illnesses, and greater use of expensive drugs, making health coverage more costly for both companies and workers.Key Facts
- Employer health costs are projected to grow 9.5% in 2027, reaching over $19,000 per employee.
- Workers will pay an average of $5,297 for health coverage in 2027, which is $388 more than in 2025.
- Health care cost increases have more than doubled since 2022, rising from 3.7% to 8.8% in 2026.
- Increased use of drugs like GLP-1s and more chronic diseases contribute to higher costs.
- AI in medical billing and coding leads to more detailed records and can increase charges.
- Employers typically cover about 82% of health plan costs.
- Companies are considering changes to benefits and cost management to handle rising expenses.
- Tightening cost controls, such as dropping high-cost providers, could upset some employees.
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