Employers expect healthcare costs to rise by 9.2% in 2027 before accounting for plan design changes, according to the Business Group on Health’s annual Employer Healthcare Strategy Survey, released yesterday. Anticipated changes to plan design would trim the increase to 8%.
For 2026, employers reported a median trend of 8.5%, falling to 7% after plan changes. Actual costs have outrun employer projections for three consecutive years. Employers projected a 6.8% increase for 2025 and recorded 8.8%, a two-percentage-point miss that the group described as its largest outside the first year of the pandemic. If current forecasts hold, healthcare costs will have risen a cumulative 76% between 2018 and 2027, roughly double the rate of general inflation over a comparable span.
“This volatility is the new reality,” said Ellen Kelsay, president and CEO of the Business Group on Health.
Pharmacy now accounts for 25% of employer healthcare spending and is projected to increase 12% in 2026. Coverage of GLP-1 medications for obesity fell to 60% of employers in 2026 from 72% in 2025. Thirty-two percent of employers will offer a transparent or new-generation pharmacy benefit manager in 2027, with another 47% weighing the move for 2028 or 2029.
Provider pricing ranked among the leading cost drivers. Sixty-two percent of employers said hospital price increases are driving their costs to a great or very great extent, and 48% said the same of outpatient facility costs. Forty-five percent reported that they either experience or anticipate high volumes of claims routed through the Independent Dispute Resolution process established under the No Surprises Act.
Cancer was named the top condition driving costs by 70% of employers, up from 58% in 2025 and marking the fifth consecutive year it led. Twenty-one percent placed maternity among their top three cost drivers ahead of a 2027 shift from bundled to unbundled maternity reimbursement.
Employers also reported tightening vendor oversight. Ninety-five percent have issued a request for proposal in at least one vendor category. By 2027, 58% intend to replace underperforming vendors and the same share plan to eliminate programs with low utilization, while 83% are expanding the scope of performance guarantees and 71% are tying a larger share of vendor fees to outcomes.
Sixty-four percent of employers said artificial intelligence is driving healthcare costs upward through revenue-optimization activity and upcoding. Fifty-nine percent reported greater CFO or finance team involvement in benefit decisions, and 44% said their CEO is playing a larger role.
