Employer health costs are poised to see their biggest jump in over two decades

You're microdosing Ozempic and my insurance rates go up! How about eating salad and laying off the Haagan Daz!

Employer health costs are poised to see their biggest jump in over two decades

A Marsh survey of more than 1,800 employers found the expected increase would be the largest since 2003

By Cris Tolomia, Quartz Media

Updated September 3, 2026

Employer health costs are poised to see their biggest jump in over two decades

Getty Images

Marsh, the benefits consultant, is projecting an 8.2% increase in employer-sponsored health insurance costs in 2027 — the largest annual jump in more than two decades, according to The Washington Post.

The consulting firm polled more than 1,800 employers on what they expect to spend on health coverage in 2027. That 8.2% figure — the steepest since 2003 — reflects what employers expect to pay after making changes to their health plans. Without any benefit cuts, the average cost per worker is projected to climb 11%, according to the New York Times.

Even with plan adjustments, more than one in three employers in the survey expected their costs to climb at least 10%.

"This year was a rough year, and next year looks like it will be even rougher," Marsh's Beth Umland, who leads employer research on health and benefits, said in an interview with the New York Times.

Among the drivers employers and benefits consultants identified: steeper prices for hospital services and drugs, surging demand for GLP-1 treatments used for conditions such as diabetes, and the growing deployment of artificial intelligence by health systems to capture higher reimbursements through more detailed clinical records. Out-of-network physicians gaming a consumer protection statute to dispute their initial reimbursements were also named as a contributing factor.

Anticipated reductions to Medicaid are expected to compound the problem, with hospitals already encountering more patients who lack coverage or cannot afford their bills and looking to employer plans to offset the lost revenue.

The Marsh findings are consistent with projections from other benefits consultants. Aon $AON -1.17% estimated employer costs would rise 9.5% in 2027, pushing the average cost per employee above $19,000 without plan changes. The Business Group on Health, which represents large employers, projected a 9.2% median increase for its members before benefit changes.

Workers are also bearing a growing share of the burden. Employees are paying an average of 10% more in out-of-pocket costs in 2026 — about $2,167 — than they did in 2025.

The rising cost of employer-sponsored coverage follows a broader deterioration in health insurance affordability. The individual market has faced a separate but deepening affordability crisis tied to the expiration of enhanced ACA subsidies, with premiums on the individual market climbing sharply since the start of 2026.

Mercer, which conducts its own annual employer health benefits survey, projected a 6.7% increase in average cost per employee for 2026 — the highest in 15 years — with prescription drug spending, including GLP-1 medications, a key driver.

Big employers drop benefits as costs rise

By Caitlin Owens, Axios News

Sept 4, 2026

Some of the country's largest employers are pulling back on benefits as they face yet another year of near double-digit health care cost growth.

Why it matters: It's a sign that year-after-year spikes in medical costs have real consequences. And corporations are less willing to eat most of the increases.

Driving the news: Disney recently made headlines by deciding to drop health coverage for working spouses with access to their own coverage next year. A Disney spokesperson said the adjustments are being made "in response to rising health care costs nationwide."

Starbucks is ending its coverage of GLP-1s for weight loss beginning next month, and Deloitte is rolling back its parental leave and IVF funding benefits for certain employees.

"We see employers changing what's offered in the benefit in addition to some employers cutting benefits because they don't feel like they have a choice," said Dan Mendelson, CEO of Morgan Health, JPMorgan Chase's employer health division.

The big picture: A trio of recent projections all conclude that the health care benefit cost spiral isn't going away anytime soon, and the burden has become heavy enough that companies are experimenting with all kinds of measures to respond.

Marsh's annual survey of employer-sponsored health plans found that total health benefit cost per employee will rise by 8.2% on average in 2027, the highest increase since 2003. That's after companies' cost-cutting measures.

Similar projections recently released by Aon and the Business Group on Health also predicted high-single-digit cost growth next year.

A good portion of this will be passed on to employees through plan design changes, or by requiring them to cover a greater share of premium costs, per Marsh.

Between the lines: Employers shifting health costs to workers is old news. Now, they're starting to experiment with ways to address some of the underlying causes.

That includes direct contracting, offering narrower networks of hospitals, swapping vendors and steering their workers to providers deemed to be providing the most value. They're also investing more in primary care.

"Employers have already absorbed totally outrageous cost increases," said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health.

"Why is anyone surprised that they'd have to make changes to coverage? There's not some endless pot of money that the health care system can just take."

Mitchell said that, as far as she's aware, none of PBGH's members are looking to cut benefits, but "they are increasingly prepared to leave partners that don't manage costs effectively."

"I think that's the change they're collectively making, is putting the pressure where it should be on providers and health plans and other vendors to actually bring costs down."

Zoom in: Employers are particularly focused on GLP-1 coverage for weight loss.

The Business Group on Health's survey found that while 72% of employers offered GLP-1 coverage for obesity in 2025, only 60% did in 2026.

What we're watching: Cutting benefits is not the only option for employers if their cost-cutting efforts fail.

Small businesses have been dropping coverage altogether for years now, unable to afford the rising costs.

And interest in alternative benefit approaches is rising. The Business Group on Health survey found that 12% of employers are assessing such approaches.

Those include Individual Coverage Health Reimbursement Arrangements, in which employers give employees a set amount of money to purchase their own insurance.

The bottom line: "Employers don't wake up in the morning and say, 'I want to cut benefits,'" Mendelson said. "It's kind of a last resort."