Businesses in the USA have been told they need to identify new strategies if they are to tackle the burgeoning employer health care costs.

Broker Aon has released new data which predicts that US employer health care costs are projected to rise 9.5% in 2027, pushing average costs above $19,000 per employee.

The projection marks the fourth consecutive year of elevated health care cost trends approaching double digits, extending one of the most sustained periods of health care inflation employers have faced in decades.

The broker added  medical spending continues to rise as utilisation of health care services increases, chronic conditions become more prevalent and the numbers of high-cost claims grow. Prescription drug spending also remains a significant contributor, driven by growing use of specialty medications and continued adoption of GLP-1 therapies. As these treatments expand into new clinical areas such as cardiovascular disease, sleep apnoea and chronic kidney disease as emerging oral formulations broaden access and treatment options, employers are facing increasing pressure to balance access, affordability and long-term sustainability.

Additional cost pressure is emerging as providers adopt technologies, including AI, that support more detailed clinical documentation and coding, contributing to higher billed charges in some instances.

“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. “At this level, rising health care costs become much more than a budgeting challenge and influence organizational decisions from benefits strategy and employee affordability to broader workforce and financial planning priorities. Leaders are undergoing pressure to maintain affordable benefits while continuing to invest in attracting, supporting and retaining talent.”

Although health care costs are projected to increase 9.5% next year before mitigation efforts, employers routinely implement plan design changes and cost-management strategies to help offset a portion of those increases.

Even after implementing measures to manage costs, employers continue to absorb most of the increase. Employer health care cost increases have more than doubled since 2022, rising from 3.7% to 8.8% in 2026. On average, employers are responsible for about 82% of the plan cost, reflecting ongoing efforts to limit the financial impact on employees.

Employees are also facing growing affordability pressures. In 2026, employees are expected to pay an average of $5,297 for health care coverage, including both payroll contributions ($3,130) and out-of-pocket expenses ($2,167). The increase in out-of-pocket costs can be attributed to the increased utilization of health care services, as well as the enrolment in leaner plan options.

“Cost pressures are affecting employers across every sector; all industries experienced significant growth in plan costs from 2025 to 2026,” Aon’s report added. “Average employer cost increases ranged from 6.5% to 9.8% across the industries, while total plan cost increases exceed 6% across the board.

“Additionally, across all industries, employee contribution increases remained below overall employer and total plan cost increases, indicating that many organizations continue to absorb a significant share of rising health care expense.”

Employers are expected to face continued pressure from rising medical utilisation, chronic disease prevalence, and growth in drug spending. As these cost drivers evolve, organizations are increasingly focused on strategies that improve health outcomes, enhance the employee experience, and address the underlying drivers of spending to manage long-term affordability for both employers and employees.

“The organizations best positioned for the future will be those that can proactively identify emerging risks and take targeted action before costs escalate,” said Debbie Ashford, North America chief actuary, Health Solutions for Aon. “Health care costs are becoming increasingly difficult to manage through traditional approaches alone. Employers will need better data and deeper insights to understand where costs are rising and how they can make more informed decisions about their health care investments.”