Employer health care costs in the United States are expected to climb by nearly 10% in 2027, potentially marking the fourth consecutive year of increases approaching double digits, according to a new risk analysis released this week.
Aon, the world’s second-largest insurance broker, projected that employer health care costs will increase by 9.5% next year if current conditions remain unchanged.
The projected increase would translate into employers spending an additional $19,000 per employee on average, according to the analysis.
The findings continue a multiyear trend of rising health care expenses facing employers, with Aon projecting another year of significant increases across industries.
The firm cautioned, however, that the final costs employers face could be affected by steps companies take to control spending. Aon said many employers are expected to introduce “cost-saving changes or programs” in an effort to reduce the impact of the anticipated increases.
Aon identified several major factors behind the continued rise in costs, pointing specifically to “rising medical utilization, chronic disease prevalence and growth in drug spending.”
Those pressures are expected to affect health plans throughout the economy.
According to Aon’s projections, health plan costs are expected to rise across all industries examined. Some sectors, however, are anticipated to face larger increases than others.
The finance and insurance sector is among those expected to experience the highest spikes in health plan costs. Technology and communication employers are also projected to see some of the largest increases, along with employers in the public sector.
Mike Pasterick, Aon’s North America health solutions leader, said employers have already endured multiple years of substantial health care cost increases.
“Employers have now experienced several consecutive years of health care cost increases that are approaching double digits,” Pasterick said in a statement.
He warned that increases at that level can have consequences extending well beyond an employer’s health care budget.
“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,” Pasterick said.
The mounting costs are also forcing employers to weigh the affordability of their benefits against other priorities involving their workers, according to Aon.
Pasterick said business leaders are facing pressure to continue offering benefits employees can afford while simultaneously spending money on efforts designed to recruit, assist and retain workers.
“Leaders are undergoing pressure to maintain affordable benefits while continuing to invest in attracting, supporting and retaining talent,” he said.
The latest projection indicates that employers could be headed for another year of steep health care increases in 2027, with rising medical use, chronic diseases and increased spending on prescription drugs among the key forces Aon identified as driving costs higher.
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