9.2% healthcare cost increase predicted for 2027
WASHINGTON, D.C., August 25 — Employers report that healthcare cost volatility has intensified the need for an overhaul in strategies to mitigate healthcare costs and optimize health outcomes, according to Business Group on Health’s 2027 Employer Healthcare Strategy Survey, released today.
Employers predicted that healthcare cost trend increases for 2027 will come in at a median of 9.2%, offset to 8% with plan design changes, the Business Group survey showed. A median 8.5% trend is expected for 2026, potentially reducing to 7% after plan changes.
When including the 2026 and 2027 predicted trends before plan changes, healthcare costs could potentially rise a cumulative 76% in just 10 years, about double the rate of general inflation in the United States for a comparable period.
These unprecedented trends follow three consecutive years during which actual costs have exceeded employer predictions, with each successive forecast “miss” being greater than the one before it. Taken together, employers are experiencing levels of volatility not seen previously, initiating increased CFO and other senior leader involvement.
“An array of forces across the healthcare industry, from soaring hospital and drug costs to the rapid innovation of specialized treatments and unintended impacts from federal health policy changes, have contributed to a considerable unpredictability in cost,” said Ellen Kelsay, president and CEO of Business Group on Health. “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.”
For the fifth year in a row, cancer is the top condition driving healthcare spending, with 70% of respondents saying it was their No. 1 cost driver in 2026, up from 58% in 2025. Fully 92% of employers categorized cancer as one of the top three conditions fueling costs. While musculoskeletal (68%) and cardiovascular (37%) again ranked second and third, respectively, employers also identified maternity (21%), gastrointestinal (15%) and autoimmune (14%) conditions as emerging drivers. Treatment for many of these conditions often involve complex care and costly therapeutic approaches.
To achieve better outcomes, employers said they have taken more aggressive approaches, which include leveraging the request-for-proposal (RFP) process to secure lower pricing (71%), elevating prevention and primary care (60%), eliminating vendors that underperform (58%) and adding programs to address areas of high cost (52%). Employers also noted plans for 2027 to offer at least one Center of Excellence (84%).
Pharmacy now represents an alarming 25% of employers’ total healthcare spend, and employer drug costs are estimated to rise 12% in 2026, a sharper uptick than overall trend. Contributing factors attributed to cost increases include the rapid growth in GLP-1 use for obesity and expanded indications; a broader availability of cell and gene therapies; and a greater prevalence of chronic conditions, among other factors.
Employers reported more proactive cost-containing strategies for pharmacy, across areas such as GLP-1 coverage and eligibility, specialty drugs, biosimilars and new pharmacy benefit management (PBM) approaches. Fewer employers are covering GLP-1s to treat obesity, with coverage dropping from 72% in 2025 to 60% in 2026. Other tactics include exploring transparent/newer generation PBM models, moving to formularies that prioritize lowest net cost and/or clinical effectiveness; and implementing site-of-care management.
“Employers remain deeply committed to sponsoring health coverage and are uniquely positioned to transform the current landscape through near- and long-term strategies,” Kelsay said. “That means engaging both leadership and the workforce in discourse about the need for disruption that eliminates waste, rewards value and holds vendor partners accountable for results. The right kind of disruption can improve affordability and clinical outcomes.”
The Business Group on Health survey gathered data on key topics related to employer-sponsored healthcare. A total of 127 employers across diverse industries, which together cover over 11 million people globally, including 8.7 million individuals in the United States, completed the survey in June 2026.
About Business Group on Health
Business Group on Health is the leading non-profit organization representing employers’ perspectives on optimizing workforce strategy through innovative health, benefits and well-being solutions and on health policy issues. The Business Group keeps its membership informed of leading-edge thinking and action on healthcare cost and delivery, financing, affordability and experience with the healthcare system. Business Group members include the majority of Fortune 100 companies as well as public-sector employers, who collectively provide health and well-being programs for more than 60 million individuals in 200 countries. For more information, visit www.businessgrouphealth.org.
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