Your 2027 Health Costs Are About to Jump the Most Since 2003. Here Is Why.
Roughly 160 million Americans get their health insurance through a job, and in the next few weeks most of them will log into a benefits portal and choose a plan for 2027. What they find there may be the shock of the open enrollment season. Employer health plan costs are projected to rise 8 to 10 percent next year, the largest increase in more than 20 years and double the average increase of the 2010s.
For a typical worker, an increase of that size works out to roughly $400 to $500 more over the coming year, and that figure is a floor rather than a ceiling, because many employers have already been making plans less generous to keep the headline numbers down. The projections come from the large benefits consulting firms that track total costs, which combine what employees pay in premium contributions with what their employers pay on the other side.
What Is Driving the Increase
Consultants point to a familiar list of pressures that have all intensified at once. People are using more care, catching up on procedures that were delayed in earlier years. New drugs are arriving at record prices, with expensive specialty therapies entering routine use. GLP-1 medications for weight loss and diabetes have become a major line item for employers who chose to cover them. Hospital systems keep consolidating, which tends to push up the prices negotiated by insurers. And providers have adopted AI assisted billing tools that are very good at finding additional charges, a quiet driver that adds to the total without anyone voting on it.
There is also a structural piece of arithmetic working against workers. Economic research shows that employees indirectly pay the employer share of premiums as well, because money spent on health coverage is money that does not show up as wage growth. When total costs jump 8 to 10 percent, the sting arrives twice: once in the paycheck deduction and once in the raise that never materializes.
The Increase Is Bigger Than the Number Suggests
The headline percentage understates what families will actually experience, because part of how employers hold cost increases down is by trimming the benefit itself. Raising deductibles is the most common move, shifting spending onto workers before coverage begins. Coverage of GLP-1 drugs for obesity at large employers has already fallen from 72 percent to 60 percent.
Strip those changes out, and the consulting firms estimate costs would have climbed another one to three percentage points. The totals also cover only people with job based coverage, which is where the second and third shocks of the health cost cycle are aimed.
The First Shock: Marketplace Premiums
The year opened with the first blow. Enhanced premium tax credits, first passed in the 2021 American Rescue Plan Act and extended by the 2022 Inflation Reduction Act, expired on December 31, 2025, after Congress declined to renew them in the One Big Beautiful Bill Act. KFF estimated the decision raised after subsidies premiums by an average of 114 percent, or about $1,000 a year, for the 24.3 million people who buy coverage through the ACA marketplaces.
Enrollment fell 12 percent, from 21.8 million to 19.2 million, as people left the market. New Mexico, the one state that replaced the federal subsidies with its own money, was the only state where enrollment grew. Others traded down to skimpier coverage: the share of enrollees in the least generous bronze plans climbed from 30 percent to 40 percent, and the average deductible rose by more than $1,000 to $3,786. Even after all that switching and leaving, the average marketplace premium hit $178 a month in 2026, 58 percent higher than in 2025 and above the $164 people paid in 2021. Insurers have already proposed another 15 percent increase for 2027, stacked on top of this year’s 20 percent jump.
The Third Shock: Medicaid Work Rules
The third shock lands on January 1, 2027, when a new federal requirement takes effect asking the 44 states, plus Washington DC, that expanded Medicaid to document 80 hours a month of work, school or community service for expansion adults. The Congressional Budget Office estimates the requirement will push about 5.7 million people off Medicaid by 2034 and leave 5.3 million more uninsured.
The evidence from the last time this was tried is sobering. 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 percent of them either met the requirement or qualified for an exemption, and they lost it largely to paperwork. The same law also imposes eligibility checks every six months instead of once a year, shortens retroactive coverage and limits the provider taxes states use to fund their share, provisions that bring the CBO projection to 7.5 million more uninsured people by 2034.
Why Historians of Health Policy Are Paying Attention
The authors of the new analysis in TIME argue that these three shocks arriving back to back may create something rare in American politics: a generational window for reform. The pattern of big attempts runs about once a generation. Harry Truman fought for national health insurance in 1945. Lyndon Johnson signed Medicare and Medicaid into law in 1965. Bill Clinton pushed reform in 1994. Barack Obama passed the Affordable Care Act in 2010.
Healthcare costs already rank among voters’ top concerns, with polling showing Americans cutting back on care and skipping prescriptions because of price, which is one reason the midterms are full of arguments about coverage. Whether the moment produces legislation is unknowable, but the authors make the case that the political incentives are now aligned in a way they have not been for 15 years.
What To Do During Open Enrollment
Practical steps still matter. Most employers hold open enrollment for two or three weeks starting in October or November for the plan year that begins January 1, so the window is short. Start by comparing total cost rather than the premium alone: add the deductible, the out of pocket maximum and the expected copays for medications you actually take.
Check whether the plan changed its formulary, because GLP-1 coverage has been the most common benefit to disappear. If you are healthy and rarely see doctors, a high deductible plan paired with a health savings account can still be the cheaper bet. If you take specialty medications, run the numbers carefully against last year’s plan. And if you buy your own coverage or rely on Medicaid, watch the calendar too, because the subsidy and eligibility changes above are already in motion.
Frequently Asked Questions
How much will health insurance costs rise in 2027?
Large benefits consulting firms project that total employer health plan costs will rise 8 to 10 percent in 2027, the largest increase since 2003, which works out to roughly $400 to $500 more for a typical worker.
Why are employer health plans getting more expensive?
Consultants cite increased use of care, expensive new drugs, GLP-1 medications, hospital consolidation and AI assisted billing. Employers are also trimming benefits such as deductibles and GLP-1 coverage, which hides part of the true increase.
When is open enrollment for 2027 health plans?
Most employers hold open enrollment for two or three weeks starting in October or November, with the new plan year beginning January 1. Marketplace open enrollment for subsidized coverage follows a separate federal calendar.
How do the Medicaid work requirements affect coverage?
Starting January 1, 2027, expansion states must verify 80 monthly hours of work, school or community service. The CBO projects 5.7 million people will lose Medicaid by 2034, largely through paperwork, following the Arkansas experience where 95 percent of those who lost coverage were actually eligible.
