Aon plc (NYSE:AON) said U.S. employer health care costs are projected to rise 9.5% in 2027, pushing average costs above $19,000 per employee.
The projection would mark the fourth consecutive year of elevated health care cost increases approaching double digits. In a release issued Thursday, Aon said the trend extends one of the most sustained periods of health care inflation employers have faced in decades.
Health Care Costs Keep Rising
Aon said higher medical utilization, the growing prevalence of chronic conditions and an increase in high-cost claims are contributing to the rise in health care spending.
Prescription drug costs are also a significant factor, particularly as employers see greater use of specialty medications and GLP-1 treatments. Aon noted that these therapies are expanding into areas including cardiovascular disease, sleep apnea and chronic kidney disease, while newer oral treatments could broaden access.
The pressure is already being felt by employers. Aon said employer health care costs rose 8.8% in 2026, up from 3.7% in 2022. Employers currently absorb about 82% of total health plan costs.
Employees are also facing higher expenses. Average employee health care costs are expected to reach about $5,300 in 2026, including payroll contributions and out-of-pocket costs.
GLP-1 Drugs Add to Employer Costs
The growing use of GLP-1 medications has become a notable expense for large employers.
Bank of America Corp (NYSE:BAC) said in August that it spends more than $2 billion annually on employee health care, with GLP-1 medications accounting for about 13% of that spending. CEO Brian Moynihan called the coverage a long-term investment in employee health and productivity.
Earlier cost estimates also showed employer health benefit costs were already rising sharply. Mercer projected a 6.7% increase in health benefit costs per employee in 2026, while nearly half of large employers were expected to raise deductibles, copays or other out-of-pocket costs for workers in 2027.
Employers Face More Cost Pressure
Aon said providers’ growing use of technologies such as artificial intelligence for clinical documentation and coding could also contribute to higher billed charges.
The broader cost burden has also drawn criticism from billionaire entrepreneur Mark Cuban, who argued that companies can struggle to identify hidden costs in complex health care contracts. Cuban said employers often rely on insurance carriers, administrative services organizations and pharmacy benefit managers, making it difficult to challenge rising costs. He recommended using AI tools to review health care contracts and identify areas where companies may be overpaying.
"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. He said the increases are affecting benefits strategies, employee affordability and broader workforce and financial planning.
Aon based its projections on its Health Value Initiative database, which includes health care costs and benefit designs from more than 1,100 U.S. employers representing 7.9 million employees and $135 billion in 2026 health care spending.
The 9.5% projection assumes a status quo environment before employers make additional plan-design changes or implement cost-management programs. Aon expects many employers to take such measures to mitigate the increase.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Credit: Kelly Wilkinson via Imagn Images
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