Employers Face 9.5% Healthcare Cost Increase in 2027

The healthcare cost squeeze shows no sign of easing, with employer healthcare costs projected to jump 9.5% in 2027, pushing average spending above $19,000 per employee, according to new data from consulting firm Aon.

Aon’s projection, based on surveying more than 1,100 U.S. employers ⁠covering 7.9 million employees, marks the fourth consecutive year of near-double-digit healthcare cost increases, extending one of the most sustained periods of healthcare inflation employers have faced in decades. 

“Employers have now experienced several consecutive years of healthcare cost increases that are approaching double digits,” said Mike Pasterick, North America health solutions leader at Aon. Employer healthcare costs have more than doubled since 2022, rising from 3.7% to 8.8% in 2026, according to Aon.

Higher healthcare utilization, an increase in chronic conditions, and the growing use of costly GLP-1 drugs are among the factors driving those increases. 

Roughly 1 in 8 adults are now taking a GLP-1 drug for weight loss, according to KFF, and it’s putting a growing cost burden on employers: The brand-name injectable drugs typically cost between $1,000 and $1,500 a month for consumers, and employers may foot 70% to 100% of that bill.

Cost pressures from the drugs are causing employers to come up with tactics to hold down costs. Some are being more deliberate about prescription drug benefits strategies — according to the 2026 SHRM Employee Benefits Survey, the percentage of employers utilizing independent pharmacy management programs jumped to 23% in 2026, up from 18% in 2025 — while other employers are putting in place measures such as increasing BMI thresholds or adding additional clinical criteria before employees can qualify for the drugs. 

Meanwhile, a growing number of employers say they are planning to drop, or are considering dropping, GLP-1 coverage as prescribed for weight loss as costs soar. Starbucks will no longer cover GLP-1 medications prescribed for weight loss for benefits-eligible employees, according to reports. 

“I am hearing a lot from my clients requesting help with understanding the long-term ROI,” Eileen Pincay, pharmacy practice leader at benefits and HR consultancy Segal, said of GLP-1 coverage. “They’re asking questions like, ‘Will these meds ultimately lower overall healthcare costs?’ and more importantly, ‘Will we see reductions in other comorbid conditions like hypertension, high cholesterol, and other obesity-related diseases?’ Many employers are still waiting for more long-term outcomes data before deciding if they want to start covering these drugs or to continue covering them.” 

Aon’s projected 9.5% hike in healthcare costs does not account for mitigation efforts, so actual cost increases for employers could be lower as they take steps to manage spending.

Related Tool: GLP-1 Calculator 

Employees Dealing with High Costs, Too

The latest figures from Aon underscore what many employers already know: Rising healthcare costs continue to put pressure on employers’ benefit budgets — and on employees’ pocketbooks. 

“It’s unsustainable,” John Tournet, the U.S. CEO of Gallagher’s benefits and HR consulting division in Charlotte, said of rising healthcare costs. He added that the “old ways of doing things” — such as raising both premiums and deductibles each year for employees — are equally unsustainable. 

Related Article: Healthcare Costs Are Unsustainable. Employers Need to Think Differently 

Indeed, employees are facing affordability pressures. In 2026, employees are expected to pay an average of $5,297 for healthcare coverage, including both payroll contributions ($3,130) and out-of-pocket expenses ($2,167), according to Aon. The increase in out-of-pocket costs can be attributed to higher utilization of healthcare services, as well as greater enrollment in leaner plan options.

The higher costs are “putting pressure” on employers to “maintain affordable benefits while continuing to invest in attracting, supporting and retaining talent,” Pasterick said. The 2026 SHRM Employee Benefits Survey found that healthcare benefits continue to be the most important benefit offering for employees, reiterating that employers will likely want to keep offering robust benefits and not cut too deeply into coverage.