If you get health insurance through work, 2027 is shaping up to be an expensive year. Mercer's 2026 National Survey of Employer-Sponsored Health Plans (Mercer now publishes under the Marsh name) projects that total health benefit cost per employee will rise 8.2% in 2027, even after employers make the cost-saving changes they have planned. Without those changes, employers expect 11%. (Mercer, Aug. 31, 2026)
The causes are a mix of old and new: higher prices, more expensive treatments, more use of care, and changes in how providers bill insurers. Mercer singles out three newer drivers (GLP-1 medications, AI-enabled claims submission and the No Surprises Act payment dispute process) and estimates each adds up to about one percentage point to the 2027 trend. Below, we look at each driver, show the public data behind it where it exists, and turn it into decisions you can make this open enrollment.
A five-year run of faster growth
Mercer's own series shows how unusual 2027 is. After roughly a decade of 2% to 4% annual increases, costs have now risen faster for five straight years, and 2027's projection is the highest of the run. Mercer projected 6.7% for 2026.
Mercer's chart also compares cost growth with consumer prices. In its series, inflation was 3.4% for the 12 months to July 2026, well below the 6.7% projected cost increase for 2026. (Mercer chart data)
The major drivers at a glance
| Cost driver | Mercer estimate for 2027 | What is behind it |
|---|---|---|
| GLP-1 medications for weight management | About +1 point | More people using costly weight-management drugs raises prescription spending. |
| AI-enabled claims submission | Up to +1 point | Billing software that assists physicians has led to more claims, and higher-level claims, being submitted. |
| No Surprises Act dispute resolution | Up to +1 point | Dispute volumes and the amounts awarded to providers have far exceeded predictions. |
| Provider consolidation | Not quantified | Fewer, larger health systems have more bargaining power over prices. |
| Advanced treatments and high-cost claims | Not quantified | New diagnostics and therapies, such as cancer treatments, often cost more than what they replace. |
| Public reimbursement pressure | Not quantified | When government funding lags inflation, providers seek more from private plans. |
Driver 1: GLP-1 medications are raising prescription spending
GLP-1 drugs were first used to control blood sugar in type 2 diabetes. Some are now approved for chronic weight management too: the FDA approved Zepbound (tirzepatide) for that use in November 2023, noting that about 70% of American adults have obesity or overweight. (FDA, Nov. 8, 2023)
Mercer's actuaries estimate that rising GLP-1 use for weight management accounts for a full percentage point of 2027 cost growth, even though some employers have already dropped this coverage for next year. The logic is simple: when more people use an expensive drug, total claims rise unless lower prices, rebates or savings elsewhere offset it.
KFF's 2026 survey shows how divided employers are. Coverage for weight loss is more common at the biggest firms, and among large firms that cover these drugs, 29% say the impact on prescription spending has been "significant" (61% at firms with 5,000 or more workers). Twelve percent of large firms that do not cover them say they stopped in the past 12 months. (KFF 2026)
These are trade-offs. Restricting coverage can cut spending now, but employers also weigh employee health, access to treatment and the long-term cost of untreated conditions. Forty percent of large firms that cover the drugs for weight loss now require a dietitian, case manager or lifestyle program first.
Driver 2: AI-enabled billing can increase the number and size of claims
AI tools can help clinicians document visits and cut paperwork. They can also change what gets billed. A documentation tool may surface diagnoses, details or codes in a physician's notes. When the record supports them, that is more accurate billing. When it does not, it is higher billing intensity without more care.
Mercer reports that rapid adoption of AI-enabled software that assists physicians with claims submission "has resulted in more claims, and higher-level claims," and estimates it can add up to one percentage point to 2027 trend. No public federal dataset yet separates AI-driven coding from other billing changes, so we do not chart it. The question to watch is whether higher payments reflect real changes in care.
Driver 3: The No Surprises Act's arbitration process is adding costs
The No Surprises Act protects patients from many surprise out-of-network bills, such as emergency care or a provider they did not choose. It also created a Federal Independent Dispute Resolution (IDR) process where providers and plans settle payment disagreements. Mercer says case volumes and the amounts awarded to providers have far exceeded predictions, adding up to one percentage point to 2027 trend.
Federal data back up the volume part. Disputes initiated have risen every half-year since 2023:
Outcomes have favored providers. In the second half of 2025, providers, facilities or air ambulance services prevailed in about 85% of payment determinations (88% in the first half), and the winning offer was higher than the plan's qualifying payment amount (QPA, a benchmark based on in-network rates) in about 87% of cases. The top three initiating parties accounted for about 44% of disputes in the first half of 2025. (CMS, H2 2025 report; CMS, H1 2025 report)
Two things can be true
A law can protect patients from unexpected bills and still raise costs for plans through how provider payments get decided. Those plan costs eventually flow back into premiums. How large the effect stays depends on dispute volumes, awards and any rule changes.
Driver 4: Consolidation strengthens providers' negotiating power
Not every increase comes from new drugs or technology. Prices negotiated between hospitals and insurers remain a core driver. When hospitals and physician groups merge into larger systems, insurers have fewer alternatives to include in networks, and those systems can negotiate higher rates for surgeries, specialist visits, imaging and more. Mercer lists consolidation, along with government reimbursement that does not keep pace with inflation, as ongoing pressures, but does not assign either a separate percentage-point figure.
Federal spending data show hospital care is where the money is moving. Hospital spending grew 8.9% in 2024 after 10.6% in 2023, and CMS says hospital prices rose 3.4%, the fastest since 2007. Private insurance spending on hospital care grew 10.4%. (CMS NHE Fact Sheet; CMS NHE 2024 Highlights)
Note: CMS data describe all U.S. health spending and do not isolate the effect of consolidation. We show them as context for the price pressure Mercer describes, not as proof of its size.
Driver 5: Advanced treatments improve care but raise costs
New cancer therapies, specialty drugs and treatments for rare diseases can extend lives or offer options where none existed. They can also be extremely expensive. Mercer says extremely high-cost claims have become more common, making costs both higher and more volatile, and "managing high-cost claims" is employers' top priority: 64% of large employers call it very important. A few very large claims can swing an employer's budget, especially at smaller firms with fewer people to spread costs across. Mercer does not put a separate number on this driver in its preliminary 2027 forecast.
What these drivers mean for you
These pressures are hitting at once, and their effect varies by employer. Mercer found that 59% of employers plan cost-cutting changes for 2027, including plan designs like higher deductibles, and that about two-thirds of large employers expect to increase employees' share of premiums. That means many workers' paycheck deductions may rise by more than 8.2%.
That pattern is already visible. In KFF's 2026 survey, workers' average contribution for family coverage rose 9% in one year, faster than the total premium. Workers at small firms (10 to 199 workers) paid $9,687 on average, versus $6,840 at larger firms. (KFF, Oct. 22, 2026)
Not every response shifts costs to you. Some employers are steering people to higher-quality providers (58% of large employers rate this important or very important) or adding options like variable copay plans, which 12% of large employers plan to offer in 2027. These typically have low or no deductibles and charge less when you choose top-performing providers.
Worked example (illustrative)
Start with KFF's 2026 family averages: a $28,303 premium, of which the worker pays 27%, about $7,642 by that percentage (KFF's measured average contribution is $7,471; the gap comes from rounding the share). If the premium rises 8.2% and your share stays at 27%, your cost rises to about $8,268, or roughly $627 more a year. If your employer also raises your share to 30%, you would pay about $9,187, about $1,545 more. These are illustrations using averages, not predictions for your plan. Try your own numbers:
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Educational content only. This article summarizes published survey and government data for general education. Mercer's figures are preliminary survey averages and actuarial estimates, not predictions for any employer or plan. The worked example and calculator are illustrations based on stated assumptions. Sources were checked in October 2026, and figures change. WealthLanding is not affiliated with Mercer, Marsh, KFF or any government agency. Nothing here is medical, legal, tax or financial advice; review your own plan documents and talk with your benefits administrator or a qualified professional before you enroll.
Sources
All sources were checked in October 2026. Every number in the charts comes from these pages.
- Mercer (Marsh), “Survey: Health benefit costs expected to jump 8.2% in 2027, the biggest increase since 2003”, Aug. 31, 2026, and its published chart data (annual cost change 2013–2027; inflation per BLS CPI)
- KFF, 2026 Employer Health Benefits Survey (Figure A; GLP-1 coverage) and news release, Oct. 22, 2026
- CMS, National Health Expenditure Fact Sheet and NHE 2024 Highlights
- CMS, Independent dispute resolution reports: supplemental background for H1 2023, H2 2023, H1 2024, H2 2024, H1 2025 and H2 2025
- FDA, “FDA Approves New Medication for Chronic Weight Management”, Nov. 8, 2023