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Two-thirds of big employers plan to push Mercer's 8.2% health cost rise onto paychecks
Mercer's survey of 1,800 employers puts health costs per worker up 8.2% in 2027, the steepest rise since 2003, and the $3.48 an hour employers already spend on health insurance comes out of the same budget as pay.
The Investor · Invest desk
What happened
- Mercer's survey of 1,800 US employers projects health costs per employee rising 8.2% in 2027, the steepest increase since 2003 and the fifth consecutive year of elevated cost growth.
- Two-thirds of employers with 500 or more workers plan to raise premiums, so payroll deductions at those companies climb faster than the 8.2% average sitting on the employer's books.
- Mercer's chief actuary, Sunit Patel, put GLP-1 weight-loss drug use at one percentage point of the total 2027 health cost increase.
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Why it matters
- cost Workers on family coverage start from an average $6,850 employee premium contribution, so tracking the 8.2% average costs them about $562 more next year before any deductible change lands.
- constraint Health insurance already takes $3.48 of the $14.07 an hour employers spend on benefits, and the 2027 increase is funded from the same per-employee budget that pays raises.
- decision Choosing between premium share and plan design is choosing who pays: a premium increase bills every worker every payday, a deductible increase bills the ones who get sick.
- precedent CBO projects health insurance costs slightly outpacing wages for the next 30 years, so a plan change made for 2027 becomes the baseline the 2028 renewal is priced against.
Private employers spent about $3.48 an hour on health insurance in June, out of $14.07 an hour on benefits of every kind, according to Bureau of Labor Statistics data [5]. That is 24.7% of the benefits bill [6]. Run Mercer's 8.2% through the health line and it adds about 29 cents an hour, or roughly $594 a year for a worker paid for 2,080 hours [7].
Two-thirds of employers with 500 or more staff say they will raise premiums [2]. Almost half of the large employers Mercer surveyed say they will change existing medical plans so that deductibles and copays go up [3]. Those are two different bills. A premium increase is charged to everyone every payday; a deductible increase is charged to whoever gets sick. Workers on family coverage contributed an average of about $6,850 to premiums last year [9], and at the 8.2% average that becomes roughly $7,412 [10]. "They're going to absorb some portion of it at the employer level, and then they're going to push the rest to the employee," Brandy Thompson, CEO of benefits technology company BenefitBay, told Fortune [17].
Mercer's chief actuary, Sunit Patel, put GLP-1 weight-loss drug use at one percentage point of the total 2027 increase [4]. That leaves 7.2 points, about 88% of the rise, to everything else [20]: hospital consolidation and lower government healthcare spending, which Mercer describes as structural forces holding costs above inflation, plus expensive new cancer treatments and AI-enabled medical billing [19].
"The reality is this does eat into money that could be invested in wages," Nick Stefanizzi, CEO of Northwell Direct, told Fortune [11]. The Congressional Budget Office builds the same logic into its household income work, counting employer contributions as a "substitute to cash wages" [13]. On CBO's analysis, salaries fell from 91% of total worker compensation in 1960 to an average of 82% over the past decade, driven by growing employer health insurance contributions [14]. The non-salary half of that split doubled, from 9 cents on the compensation dollar to 18 [15].
Wages in 2027 sit outside what this survey measures. The link from a benefits line to a pay budget is an assumption in this evidence, supported by CBO's six-decade series and by executives who sell into the benefits market. Stefanizzi's company provides health benefits to self-insured employers, and Thompson's sells benefits technology [21]. Fortune's account of the survey does not say whether the 8.2% is measured before or after the plan changes employers told Mercer they would make [1]. The case that this lands on pay breaks if total compensation per employee grows faster than 8.2% while employee premium shares hold flat. The two-thirds figure is a stated intention [2].
What to watch
- Whether 2027 renewals actually land at 8.2% once the plan changes employers described to Mercer are priced in.
- How many of the large employers that told Mercer they would raise premiums execute the increase at renewal.
- Whether GLP-1 spending stays at the one percentage point Mercer's chief actuary assigned it for 2027.