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Employer Health Premiums to Jump 8-10% in 2027, Largest Rise in Two Decades
Employer health plan costs are projected to rise 8 to 10% next year, the biggest increase since 2003, while ACA Marketplace enrollees already absorbed a 114% average premium hike and Medicaid work requirements loom in January 2027.
American workers are about to absorb the steepest increase in employer-sponsored health insurance costs in more than two decades, the second in a series of three successive shocks to the nation's healthcare system.
Employer health plan costs are projected to rise 8 to 10% for the 2027 plan year, according to large benefits consulting firms. That is the largest increase since 2003 and roughly double the average annual increase of the 2010s. For a typical worker, the jump works out to roughly $400 to $500 more next year.
About 160 million Americans receive health insurance through an employer. Most will log into benefits portals this fall, when open enrollment runs for two or three weeks starting in October or November, to choose a plan for the year beginning Jan. 1. Even workers accustomed to rising healthcare costs may be surprised by what they see.
The consulting firms attribute the surge to several factors: more use of medical care, expensive new drugs including GLP-1s, hospital consolidation, and AI-assisted billing. The projections cover total costs, combining worker premium contributions and employer payments. Separate data on workers' own costs show similar increases, and economic research indicates employees also pay the employer share indirectly through smaller wage increases.
The totals understate the full burden, because many employers have made plans less generous to hold costs down. One common change is raising deductibles, which shifts costs onto workers. Another is cutting what is covered. The share of large employers covering GLP-1s for obesity, for example, has fallen from 72% to 60%. Without those changes, the consulting firms estimate costs would have climbed another one to three percentage points.
The workplace increase is the second of three shocks. The first arrived in January 2026, when the 24.3 million enrollees in ACA Marketplace plans saw their after-subsidy premiums rise by an average of 114%, or about $1,000 a year. The enhanced premium tax credits, first passed in the 2021 American Rescue Plan Act and extended in the 2022 Inflation Reduction Act, expired on Dec. 31, 2025, after Congress declined to renew them.
Enrollment fell 12%, from 21.8 million to 19.2 million, as some people left the market. New Mexico, the only state that replaced the federal subsidies with its own money, was the sole state where enrollment grew. Others traded down to skimpier plans but still pay more. The share of enrollees in the least generous bronze plans rose from 30% to 40%, and the average deductible climbed by more than $1,000 to $3,786.
Even after that switching and attrition, the average premium paid by Marketplace enrollees reached $178 a month in 2026, 58% higher than in 2025 and above the $164 paid in 2021, the last year before the enhanced credits. Because those who left were healthier than those who stayed, insurers have proposed another 15% increase for 2027, stacked on top of this year's 20%.
The third shock hits Medicaid next January. Starting Jan. 1, 2027, the 44 states and Washington, D.C., that expanded Medicaid must require adults covered by the expansion to document 80 hours a month of work, school, or community service. The Congressional Budget Office estimates the requirement will push about 5.7 million people off Medicaid by 2034, leaving 5.3 million more people uninsured.
Most of those people should not lose coverage. The evidence suggests they will meet the criteria and lose coverage anyway because of the paperwork burden. When Arkansas imposed a work requirement in 2018, employment did not change. Instead, more than 18,000 people lost coverage within seven months, even though 95% either met the requirement or qualified for an exemption.
The work requirement is not the only Medicaid cut. The law also requires eligibility checks every six months instead of once a year, shortens retroactive coverage, and limits the provider taxes states use to fund their share of the program. Counting those provisions, the CBO projects 7.5 million more people will be uninsured by 2034.
History suggests the American political system attempts bold healthcare reform about once a generation. President Harry Truman fought for national health insurance in 1945. President Lyndon B. Johnson signed Medicare and Medicaid into law in 1965. President Bill Clinton pushed for reform in 1994, and President Barack Obama passed the Affordable Care Act in 2010. With healthcare costs already among voters' top concerns, these shocks may open the next generational window for reform.
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