Health Insurance Costs Set for Biggest Jump Since 2003

Open enrollment is about to hit, and your health insurance costs are heading for the biggest jump in over 20 years. If you get coverage through work, that benefits portal you click through this month may deliver some sticker shock.

Employers expect the total cost of health benefits per employee to rise 8.2% on average in 2027, the highest increase since 2003, according to Mercer's survey of more than 1,800 employers. That number already assumes companies make changes to hold costs down. Without any action, employers said their current plans would cost about 11% more.

Why health insurance costs keep climbing

This is not a one-off blip. 2027 will be the fifth straight year of elevated growth after a decade of calmer increases, and it tops the 6.7% projected for 2026. Other firms see the same wave: Aon projects 9.5% before plan changes, pushing average costs above $19,000 per employee, according to Aon's own announcement. WTW puts it even higher at 11.1%, according to CNBC.

So what is pushing the bill up? Consulting firms point to more people using care, pricey new drugs, GLP-1 weight-loss medications, hospital consolidation and even AI-assisted billing. Mercer also cited expensive new diagnostics and cancer therapies. Basically, everything in the system is getting more expensive at once.

What it means for your paycheck

Here is the part that hits your wallet. In a new essay, Stanford economists Neale Mahoney and Abigail Sanchez wrote in TIME that for a typical worker, an increase that size works out to roughly $400 to $500 more next year. That covers both what you pay in premiums and what your employer pays.

And you feel the employer share too. The same authors note that research shows workers indirectly pay it through smaller wage increases. In other words, a raise you do not get can be a health insurance cost in disguise.

The headline number also understates things. Mercer found 59% of employers plan cost-cutting moves for 2027, including higher deductibles. That shifts money from the company to you the moment you actually use your plan. According to TIME, the share of large employers covering GLP-1s for obesity has already fallen from 72% to 60%.

The ACA marketplace is not off the hook

If you buy your own plan, 2027 looks rough too. Enhanced premium tax credits expired on December 31, 2025, and KFF estimated that raised after-subsidy premiums by 114%, or about $1,000 a year. Marketplace enrollment fell 12%, from 21.8 million to 19.2 million, TIME reported.

Many people traded down to skimpier plans. The share of enrollees in bronze plans went from 30% to 40%, and the average deductible rose by more than $1,000 to $3,786. Insurers have now proposed another 15% increase for 2027, stacked on this year's 20%, per the same TIME piece.

Medicaid is the next shock

The third hit lands on January 1, 2027. Under the One Big Beautiful Bill Act, adults covered by Medicaid expansion in 44 states, including Washington, D.C., must document 80 hours a month of work, school or community service. The CBO estimates the rule will push about 5.7 million people off Medicaid by 2034.

Here is the kicker: most of them should qualify. When Arkansas tried a work requirement in 2018, employment did not change, yet more than 18,000 people lost coverage within seven months, even though 95% met the rule or qualified for an exemption. The paperwork did the damage, the TIME authors argue.

How to protect yourself this open enrollment

Do not just click renew. Compare deductibles and out-of-pocket maximums, not only monthly premiums, because that is where employers are quietly shifting costs. Check whether your plan still covers GLP-1s or specialty meds you rely on. If you have a health savings account option, run the math on it.

Also ask HR what changed. Some employers are turning to HRAs, high-deductible plans paired with HSAs and gap insurance, according to Scripps News. If you are on a parent's plan or a marketplace plan, set a calendar reminder for the enrollment window so you are not stuck with whatever auto-renews. Read our other health coverage and business reporting for more.

The bigger takeaway for Gen Z: you are entering the workforce right as health insurance costs peak, and healthcare is already a top voter concern. Mahoney and Sanchez call it a possible generational window for reform. Whether Congress uses it is another story, but your 2027 plan choice will not wait for that debate.