Employer health care costs in the United States are projected to rise 9.5% in 2027, according to professional services firm Aon plc — pushing average costs above $19,000 per employee.
This projection marks the fourth consecutive year of elevated health care cost trends approaching double digits and extends one of the most sustained periods of health care inflation employers have faced in decades. Employers now absorb more than 80% of health plan costs, as rising expenses increasingly impact workforce and business planning decisions. What’s more, the average employee is expected to spend nearly $5,300 on health care in 2026.
Medical spending continues to rise as utilization of health care services increases, chronic conditions become more prevalent, and the numbers of high-cost claims grow. Prescription drug spending also remains a significant contributor, driven by growing use of specialty medications and continued adoption of GLP-1 therapies.
As these treatments expand into new clinical areas and emerging oral formulations broaden access and treatment options, employers are facing increasing pressure to balance access, affordability, and long-term sustainability. Additional cost pressure is building, too, as providers adopt technologies (including AI) that support more detailed clinical documentation and coding, contributing to higher billed charges in some instances.
“Employers have now experienced several consecutive years of health care cost increases that are approaching double digits,” said Mike Pasterick, North America Health Solutions Leader for Aon. “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. Leaders are undergoing pressure to maintain affordable benefits while continuing to invest in attracting, supporting and retaining talent.”
Employers are expected to face continued pressure from rising medical utilization, chronic disease prevalence, and growth in drug spending, Aon officials predict. As these cost drivers evolve, organizations are increasingly focused on strategies that improve health outcomes, enhance the employee experience, and address the underlying drivers of spending to manage long-term affordability for both employers and employees.
“The organizations best positioned for the future will be those that can proactively identify emerging risks and take targeted action before costs escalate,” said Debbie Ashford, North America Chief Actuary of Health Solutions for Aon. “Health care costs are becoming increasingly difficult to manage through traditional approaches alone. 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.”