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Mercer's 8.2% health benefit forecast works out to 29 cents an employee hour
Mercer's survey of 1,800 employers has benefit costs per employee rising 8.2% in 2027, the steepest jump since 2003. Two-thirds of large companies plan to raise the employee premium share, and one independent medical practice was quoted 22.5%.
The Investor · Invest desk
What happened
- A Mercer survey of 1,800 employers expects health benefit costs per employee to rise 8.2% in 2027, the steepest increase since 2003 and the fifth consecutive year of elevated growth.
- Two-thirds of companies with at least 500 employees plan to raise the share of premiums their workers pay.
- Jack Dillon, executive director of the Association for Independent Medicine, told Fortune his own practice faced a 22.5% increase and had to choose between absorbing it and raising employees' premium share.
- Employers paid an average of $3.48 per employee hour toward health insurance in June, out of $14.07 for benefits overall, according to Bureau of Labor Statistics data.
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Why it matters
- cost The increase applies to plans covering more than 165 million Americans, and the question of whether payroll or the paycheck deduction carries it is being settled now, in budgets for a year that has not started.
- decision For an independent practice the premium quote is now a staffing decision: Dillon said some are weighing dropping benefits and paying higher wages instead, while others may reduce benefits or consolidate staff.
- contradiction Census coverage data cuts against the framing of health care workers as uninsured outliers, since support workers were uninsured at 10.5% in 2024, half a point below the 11% rate for all adults 19 to 64, so the squeeze shows up in premiums paid.
- exposure The American Nurses Association warned the consequences may eventually reach patients, and with about 15% of nurses already holding more than one job, the clinics cutting benefits are bidding for staff who have a second employer.
Run Mercer's expected increase against what employers pay now and it comes to about 29 cents an employee hour [2], or roughly $594 across a 2,080-hour year [3]. Health insurance is 24.7% of private employer benefit spend on June's figures [1]. Both of those are plan costs. The employer's own cost is a different number, and it moves whenever the employee premium share moves.
The Bureau of Labor Statistics series is the test. Put 8.2% on top of June's $3.48 and employer cost per employee hour should print near $3.77 [4]. Fortune's account does not say whether Mercer's figure is measured before or after employers change plan design. In my view the reported employer figure stays under $3.77 and the difference turns up in payroll deductions; a print at or above it, with employee contributions flat, would mean employers ate the increase.
The 22.5% increase Dillon's practice faced is 2.7 times the survey figure [5]. "It's a bigger struggle this year that I've heard than in previous years, and it's getting louder and louder," Dillon said [5].
Benefit dollars and wage dollars come out of the same budget. "The reality is this does eat into money that could be invested in wages," Nick Stefanizzi, chief executive of Northwell Direct, which provides health benefits to self-insured employers, told Fortune [8].
The individual market is not a cheap exit. Average monthly marketplace payments rose by $65 after the enhanced Affordable Care Act credits expired at the end of 2025 [8], and the average marketplace deductible rose by $1,027 [10].
Two Idaho households show both ends of the choice. Samantha LeGault, a nurse practitioner, saw the monthly premium covering herself, her husband and their four children go from $700 to $1,500 this year, $9,600 more over twelve months [9][6], and she gave up dental coverage to keep her daughters' appointments [9]. "I know how the clinics work, that I am an expensive patient," LeGault said to KFF Health News. "At the end of the day, healthcare is a business in the United States." [10]
Joshua and Ashley Durham, who run a family practice, went the other way: they dropped coverage for themselves and their two children after premiums for a similar plan reached nearly $1,600 a month, and they now pay for care out of a health savings account that held $50,000 [11]. That balance is about 2.6 years of the premium they declined [7].
What to watch
- Quarterly BLS employer cost releases: whether health insurance cost per employee hour moves toward $3.77 or stalls below it.
- Whether Congress restores the enhanced ACA credits, which set the price of the fallback for anyone dropped from an employer plan.
- Whether independent practices drop coverage outright or settle for shifting more of the premium onto staff.