Employer Health Costs Will Jump 8.2% Next Year, the Steepest Rise Since 2003
Marsh's summer survey found costs per employee would climb 11% if companies did nothing at all. Workers already paying about $5,300 a year are going to pay more in premiums and out of pocket both.
The cost of covering an employee's health care is set to rise 8.2% in 2027, the sharpest one-year increase since 2003, according to a summer survey by the consulting firm Marsh. Absent the cost-cutting measures companies are already planning, the increase would be about 11%.
Roughly 165 million Americans get health coverage through a job, which makes this the single largest piece of the country's health system and one of the biggest line items in most household budgets after housing. Employees typically shoulder about 20% of the total cost of a plan, and that share is going up in two directions at once.
Aon's August forecast puts what a worker pays this year at roughly $3,130 in premium contributions and $2,167 in out-of-pocket spending, or just under $5,300 combined — a 7.9% increase over last year's $4,909. Next year's numbers are expected to be worse. "Most employees will spend more on healthcare next year, with both higher paycheck deductions and higher out-of-pocket costs," said Beth Umland, Marsh's director of employer research.
Three forces are driving the increase. The first is the cost of treating serious illness, particularly cancer, where newer therapies carry list prices that were unimaginable a decade ago. The second is consolidation: hospital systems and physician groups have merged aggressively, and in many metropolitan areas insurers now negotiate with a single dominant provider network. The third is prescription drugs, where spending has climbed faster than any other category of benefit.
GLP-1 medications sit at the center of that last problem. Employers that added coverage for weight-loss drugs over the past three years have watched pharmacy spending climb faster than they projected, and some are now pulling back — restricting eligibility, requiring prior authorization, or dropping the coverage entirely. That has put companies in the awkward position of withdrawing a benefit that employees consider among the most valuable ones they have.
About 59% of employers told Marsh they plan changes to hold costs down next year, most commonly raising deductibles. Two-thirds of large employers expect to increase what workers contribute toward premiums. Both moves shift spending from the company's income statement onto the household, which is why the headline growth rate of 8.2% understates what many families will actually feel.
The timing is politically awkward. Health costs have been a persistent theme in midterm campaigns in both parties, and the increases land in open-enrollment season, which for most large employers runs from late October into November — overlapping the November 3 election. Democrats have pushed to extend enhanced Affordable Care Act subsidies that primarily affect the individual market, while Republicans have focused on price transparency rules and drug pricing. Neither approach directly addresses what an employer plan charges.
Originally reported by CBS News.