US Employer Health Care Costs Projected to Rise 9.5% in 2027

Per-employee health care spending is projected to climb 9.5% in 2027 and push average costs above $19,000, marking the fourth consecutive year of near–double-digit increases for US employers, according to a new analysis from Aon.¹

Aon's findings, drawn from its Health Value Initiative database covering more than 1100 US employers and 7.9 million employees, underscore that the spending increase reflects a "status quo" trend before employers implement plan design changes or cost-management strategies. Although most organizations are expected to take steps to minimize the impact, the underlying cost pressure remains steep.

Employers Still Bear Majority of Cost Growth

The annual increase in employer health care costs grew from 3.7% in 2022 to 8.8% in 2026, more than doubling over that span, according to Aon. Employers now cover about 82% of total plan costs on average, a share that has remained relatively stable even as overall costs climb. Specifically, employer costs rose from $13,269 in 2025 to $14,432 in 2026.

Cost growth also varied widely by employer and industry. The middle 50% of employers saw plan cost increases ranging from 5.5% to 11.5%, with industry-level employer cost increases spanning from 6.5% in health care to 9.8% in finance and insurance.

By contrast, employee premium contributions grew more modestly, from $2943 to $3130. In addition, employee average out-of-pocket costs rose 10.2% year over year to $2167, pushing total employee health spending to an estimated $5297 in 2026 when combined with payroll premium contributions. Aon attributed part of that increase to greater utilization of health care services and enrollment in leaner, lower-premium plan options that shift more cost exposure to employees at the point of care.

“At this level, rising health care costs become much more than a budgeting challenge and influence organizational decisions from benefits strategy and employee affordability to broader workforce and financial planning priorities,” Mike Pasterick, North America Health Solutions Leader for Aon, said in a news release. “Leaders are undergoing pressure to maintain affordable benefits while continuing to invest in attracting, supporting, and retaining talent.”

What’s Fueling the 2027 Cost Trend

Core drivers of medical spending growth include rising utilization, mounting prevalence of chronic conditions, and an increasing volume of high-cost claims. Prescription drug spending is also contributing to cost growth, particularly through increased use of specialty medications and glucagon-like peptide-1 (GLP-1) receptor agonist therapies. The expansion of GLP-1 therapies into additional clinical areas, including cardiovascular disease, obstructive sleep apnea, and chronic kidney disease, along with the development of oral formulations, is expected to add further pressure to employer health care spending.

The findings align with other recent industry projections. A separate 2027 medical cost trend estimate from PwC put commercial cost growth at 9%, citing pharmacy spend and GLP-1 utilization among several structural inflators, alongside artificial intelligence (AI)-enabled billing practices and provider consolidation.² Aon also flagged the emerging role of technology, noting that provider adoption of AI tools for clinical documentation and coding is contributing to higher billed charges in some cases.¹

How Employers Are Managing Rising Costs

Aon's report suggests that as cost drivers evolve, employers are increasingly turning to network and utilization analytics to identify savings opportunities and inform long-term benefit design decisions, rather than relying solely on traditional cost-shifting strategies. With a fourth straight year of steep increases now on the horizon for 2027, how employers respond will likely remain a central storyline for managed care stakeholders in the year ahead.

“The organizations best positioned for the future will be those that can proactively identify emerging risks and take targeted action before costs escalate,” Debbie Ashford, North America Chief Actuary, Health Solutions for Aon, said in a news release. “…Employers will need better data and deeper insights to understand where costs are rising and how they can make more informed decisions about their health care investments.”

References

1. Aon: U.S. employer health care costs continue multi-year climb, projected to rise 9.5% in 2027. News release. Aon. August 20, 2026. Accessed August 24, 2026. https://aon.mediaroom.com/2026-08-20-Aon-U-S-Employer-Health-Care-Costs-Continue-Multi-Year-Climb,-Projected-to-Rise-9-5-in-2027
2. Joszt L. AI billing, GLP-1s among forces driving 9% health cost spike. AJMC^®. June 16, 2026. Accessed August 24, 2026. https://www.ajmc.com/view/ai-billing-glp-1s-among-forces-driving-9-health-cost-spike