Employers anticipate that healthcare cost trends will increase by a median 9.2% in 2027, or potentially 8% after making plan design changes, according to a new survey from the Business Group on Health.
For 2026, employers are anticipating a median 8.5% increase, or possibly 7% after plan changes. The survey also found that for three years in a row (2023 to 2025), actual costs have exceeded employers’ predictions.
Cumulatively, healthcare costs could increase by 76% over 10 years from 2018 to 2027 when including the 2026 and 2027 predicted trends before plan changes.
“That is over double the rate of general inflation, which increased by approximately 32% between 2018 and 2026,” said Ellen Kelsay, president and CEO of Business Group on Health, during a press briefing.
The survey received responses from 127 employers, representing 11 million covered lives. Additional findings include:
1. Health system issues are a major contributor to healthcare costs: About 62% of employers report that hospital price increases are driving costs to a great or very great extent, and 48% say the same for outpatient facility costs. This is largely due to provider consolidation reducing competition and wide variation in procedure costs.
2. Pharmacy costs are a challenge: Pharmacy represents 25% of total healthcare spending, and 95% of employers are concerned or very concerned about pharmacy costs. In addition, 68% of employers are seeing an increase in utilization of GLP-1s for weight management. However, 14% of employers have dropped or will in 2027 drop GLP-1 coverage.
“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,” said Brenna Shebel, vice president of Business Group on Health.
3. Cancer, MSK and cardiovascular remain major drivers of cost: About 92% of employers listed cancer as one of the top three conditions contributing to costs, followed by musculoskeletal conditions (68%) and cardiovascular conditions (37%).
4. Employers are looking to hold vendors accountable: About 95% of employers have issued requests for proposals, 83% have increased scope of performance guarantees and 71% have increased the proportion of vendor fees tied to outcomes. In addition, 58% of employers plan to replace underperforming vendors and 58% plan to eliminate lower-utilized programs.
5. More employers are looking at alternative models: About 26% of employers plan to offer an alternative health plan in 2027, while 31% are considering it for 2028 or 2029. In addition, 32% will offer a transparent PBM program in 2027, and 47% are considering it for 2028 or 2029.
“What this signals to us is that it’s a broader shift towards greater transparency with pharmacy benefits, accountability, as well as more predictable net costs in the pharmacy benefit space,” Shebel said.
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