Health insurance costs are poised for their sharpest increase in more than two decades as employers face another year of elevated medical spending. A new survey from Marsh, the consulting firm formerly known as Mercer, found projected employer health benefit costs for 2027 would rise more than any year since 2003. The findings underscore the pressure on the job-based coverage system that insures most Americans.
Employers report the largest projected increase in more than 20 years
Marsh said on September 2 that total health benefit cost per employee is expected to rise 8.2% on average in 2027, after employers account for planned cost-cutting changes to their health plans. According to the company’s early release from its National Survey of Employer-Sponsored Health Plans, that would be the highest increase since 2003 and the fifth straight year of elevated cost growth.
The survey also found that, without benefit design changes, employers’ costs would rise by an average of 11% next year. Marsh said the estimate is based on responses collected over the summer from U.S. employers that sponsor health plans for workers and dependents. The projected increase follows a 6.5% expected rise for 2026 that Marsh had described last year as the largest increase since 2010.
The broader employer coverage market remains large. KFF has reported that employer-sponsored insurance covers roughly 155 million people in the United States, making changes in workplace health costs significant well beyond company benefit departments. KFF’s 2025 employer health benefits survey also found that average annual family premiums reached $26,993, showing how recent increases are building on an already high base.
The Marsh findings are national in scope, and the survey does not break out a full state-by-state list in its early release. That means it is not yet clear which states or local markets could see the sharpest premium pressure, and Marsh has not released a comprehensive public ranking of affected states. Still, the increase applies to employer-sponsored plans across the country, including large and small businesses that buy or self-fund coverage for workers.
For employees, the projected increase does not automatically mean premiums will rise by the same percentage. Employers often respond by adjusting deductibles, copays, plan networks, or employer contribution levels to keep premium growth below the full medical cost trend. Marsh said many companies are already planning those kinds of changes for 2027, which is why the final projected increase is lower than the underlying 11% figure.
That leaves uncertainty for households that get insurance through work. Specific changes to monthly payroll deductions, out-of-pocket costs, and covered benefits will depend on each employer’s plan decisions during upcoming enrollment cycles. What is confirmed is that benefit managers are preparing for another expensive year, and the survey suggests the pressure is broad rather than limited to one region or industry.
Marsh attributed the projected jump to several factors, including rising spending on specialty drugs, higher use of costly medical services, and continuing provider price inflation. The Washington Post, which reported on the survey, said employers pointed to multiple drivers behind the increase, with prescription drug spending and broader health care prices among the most important.
Other industry groups have been signaling similar pressure. Business and human resources coverage this year has pointed to health benefit cost growth well above general inflation, with employers facing total per-employee costs above $18,500 in 2026. That pattern suggests the 2027 projection is part of a sustained stretch of faster growth rather than a one-year anomaly.
For workers, the practical effect may be gradual rather than immediate. Some employers may absorb part of the increase, while others may redesign benefits before open enrollment to slow premium growth. Marsh said companies are increasingly focused on affordability and on reviewing plan options carefully, a sign that the next round of workplace health coverage decisions is likely to center on balancing cost control with benefit access.