Employer health costs are set to rise as much as 11% in 2027, roughly double the average annual increase of the past decade. The clearest reason is a law written to stop surprise medical bills: it produced 2.6M provider arbitration disputes in 2025, against the ~17K a year the government expected.
The process is independent dispute resolution, created by the No Surprises Act for cases where an out-of-network provider and an insurer cannot agree on payment. Half of those disputes came from just two provider practices, Radiology Partners and TeamHealth, and another 27% from HaloMD, founded in 2022 to work the process.
Providers have won about 85% of submitted disputes, and the median award in 2025 was more than four times the typical in-network cost.
The cost of all that arbitration ran about $1.6B a year from 2022 to 2024. In 2025, it hit $16.6B.
Projections by consulting firms imply arbitration could explain 25% to 40% of the extra rise in employer health costs next year. GLP-1 weight loss drugs account for up to a quarter of the increase, and AI medical coding tools that hunt for billable moments in a doctor's visit account for up to another quarter.
The bill lands on 160M insured workers
Employer coverage is where the increase lands, after a decade in which its cost rose 50%, much higher than overall inflation.
Average annual family premiums already reached $28,303 in 2026, with covered workers contributing $7,471 of that, per KFF. The most common large-employer response to rising costs was raising the worker share of the premium, reported by 44% of them. Employers are pushing more of it onto workers' paychecks.
Three Consultant Surveys All Point to Near Double Digit 2027 Health Cost Increases
Projected 2027 US employer health care cost increase before plan design changes, %
Bar chart. Percent Increase (%). WTW: Projected Increase (%) 11.10%. Aon: Projected Increase (%) 9.50%. Business Group on Health: Projected Increase (%) 9.20%.
Source: WTW, Aon, Business Group on Health
WTW projects an 11.1% increase in 2027 before plan changes, falling to 9.7% after. Aon puts it at 9.5%, pushing average cost above $19K per employee. The Business Group on Health's median of 9.2% drops to 8% with plan design changes. The 11.1% reading is a two-decade high.
Business Group on Health CEO Ellen Kelsay called them the highest numbers her organization has ever recorded.
Companies are already cutting benefits
Disney will drop health coverage next year for working spouses who have access to their own plan.
Starbucks is ending coverage of GLP-1s for weight loss, one of several large employers doing so. Deloitte is rolling back parental leave and IVF funding for certain employees.
For investors, the mechanics matter more than the headline percentage. Most covered workers at large firms sit in self-funded plans, meaning the employer pays claims directly and absorbs arbitrated awards, with insurers administering and sharing risk through stop-loss coverage.
Pharmacy spending compounds it, at 25% of employer health spend and rising an estimated 12% in 2026.
Those costs hit 2027 benefits budgets, which compete with raises and hiring inside the same payroll line. One lever could change the path. A House bill would scrap the arbitration process entirely and tie out-of-network payment to existing in-network rates.
