Employer healthcare costs set to rise 9.2% in 2027: report

NEW YORK, UNITED STATES — United States employers project a median 9.2 percent increase in healthcare costs for 2027, up from an 8.5 percent projection a year earlier, as hospital prices, pharmacy spending, and catastrophic claims continue to outpace budgets, according to the Business Group on Health’s annual large employer survey.

Hospital, pharmacy costs drive 2027 increase

The Business Group on Health’s 2027 large employer survey, which drew responses from 127 employers representing 11 million covered lives, found that 62 percent of employers cite hospital price increases as a significant cost driver and 48 percent flag outpatient facility costs, according to MedCity News.

Pharmacy spending now accounts for 25 percent of total employer healthcare expenditure, with drug costs projected to rise 12 percent. Cancer is cited by 92 percent of employers as a top-three cost condition, followed by musculoskeletal conditions at 68 percent and cardiovascular conditions at 37 percent.

Brenna Shebel, vice president at Business Group on Health, said cost management is increasingly focused on pharmaceutical utilization.

“What we saw in this year’s survey is that employers are continuing to be more selective in their coverage of GLP-1s, specifically for weight management, with a growing focus on managing utilization and ensuring value,” Shebel said.

Sixty-eight percent of employers report increased glucagon-like peptide-1 (GLP-1) utilization for weight management, and 14 percent have dropped or plan to drop GLP-1 coverage entirely.

Forecasting failures push employers toward disruption

Employers have underestimated their actual medical spending for three consecutive years, from 2023 through 2025, with each year’s miss larger than the one before. In response, 95 percent of surveyed employers issued requests for proposals to vendors, 83 percent increased performance guarantees on existing contracts, and 71 percent tied vendor fees directly to patient outcomes.

Twenty-six percent plan to introduce alternative health plan designs in 2027, and 32 percent are moving toward transparent pharmacy benefit manager programs.

Ellen Kelsay, president and chief executive officer of Business Group on Health, said the pattern of underestimation has reached a tipping point.

“This represents an unfortunate new reality for employers, who now face growing difficulty in budgeting and forecasting. It’s a call to take a more disruptive approach and rethink how to deliver value and improved health outcomes,” Kelsay said.

Healthcare costs for large employers could rise 76 percent cumulatively from 2018 to 2027, more than double the approximately 32 percent increase in general inflation over the same period.

The scale of cost growth is placing benefits administration under new financial pressure, particularly in prior authorization processing, claims editing, and pharmacy benefit management. For employers managing high-volume claims environments and complex payer interactions, outsourced administrative support has become one practical response to the gap between projected and actual spend.

Employers and benefits administrators evaluating external support options can review the top healthcare outsourcing companies in the U.S. and explore how business process outsourcing (BPO) can reduce overhead in prior authorization and claims management as part of a structured vendor evaluation.

Related news

• U.S. healthcare costs to surge 8.5% in 2026 as drug spending soars · Jul 2025
• Hospital CEO blames labor, drugs for rising U.S. healthcare costs · 6 May
• U.S. health spending hits $5.7Tn in 2025: CMS · Jul

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