US Employers Face Steepest Health Care Cost Rise Since 2003

U.S. employers are confronting the sharpest increase in health care costs in over two decades. Projections for 2027 indicate an average cost rise of 11 percent per worker if benefits remain unchanged, though plan adjustments may lower that final increase to 8 percent. This represents the steepest rise since 2003.

Marsh and other industry analysts attribute the surge to several factors, including the high cost of cancer medications, rising prices for hospital care, and significant demand for GLP-1 obesity drugs. Additionally, the adoption of artificial intelligence for documentation and higher reimbursements for out-of-network doctors are contributing to the trend. Other projections from Aon and the Business Group on Health estimate increases between 8 percent and 9.5 percent, with some average costs per employee potentially exceeding $19,000.

To manage these expenses, employers are increasing employee premiums and deductibles or cutting benefits. Some organizations are exploring direct contracting with providers to bypass traditional insurers and pharmacy benefit managers. For example, Miami-Dade County Public Schools is pursuing direct contracts with hospitals and doctors to control costs for its 45,000 employees.