U.S. employer health care costs are projected to rise 9.5% in 2027, pushing average costs above $19,000 per employee, according to a recent report from Aon.

The increase in employees seeking medical care for chronic conditions is a large part of the cost increase as well as the number of high-cost claims. 

Not surprisingly, prescription drug spending also remains a significant contributor, driven by growing use of specialty medications and continued adoption of GLP-1 therapies.

The report notes that as GLP-1 therapies expand into new clinical areas such as cardiovascular disease, sleep apnea and chronic kidney disease and as 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 emerging 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, in a statement. "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."

Even after implementing measures to manage costs, employers continue to absorb most of the increase. Employer health care cost increases have more than doubled since 2022, rising from 3.7% to 8.8% in 2026.

On average, employers are responsible for about 82% of the plan cost, reflecting ongoing efforts to limit the financial impact on employees.

While average plan costs increased 8.3%, the average tells only part of the story. The middle 50% of employers experienced increases ranging from 5.5% to 11.5%, demonstrating the wide variation in cost pressures organizations are facing.

Employees are also facing growing affordability pressures. In 2026, employees are expected to pay an average of $5,297 for health care coverage, including both payroll contributions ($3,130) and out-of-pocket expenses ($2,167).

The increase in out-of-pocket costs can be attributed to the increased utilization of health care services, as well as the enrollment in leaner plan options.

Health Care Inflation Remains a Cross-Industry Challenge

Cost pressures are affecting employers across every sector; all industries experienced significant growth in plan costs from 2025 to 2026. Average employer cost increases ranged from 6.5% to 9.8% across the industries, while total plan cost increases exceed 6% across the board.

Additionally, across all industries, employee contribution increases remained below overall employer and total plan cost increases, indicating that many organizations continue to absorb a significant share of rising health care expense.  

Looking Ahead: Navigating a New Era of Health Care Costs  

Given these costs will continue, companies are focused on strategies to 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, 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."