Another year, another round of major premium increases. Private health insurance costs are expected to rise again in 2027, making coverage and care even more difficult for many individuals and families to afford.
New survey results from Mercer show that employers expect the cost of providing health benefits to employees to increase significantly next year. At the same time, insurers that sell plans through the Health Insurance Marketplace (known in Kentucky as kynect) are asking for another large hike in premiums.
Rising health insurance costs for both employer-sponsored and individual insurance plans will force even more people to choose between paying for both health coverage and health care and covering other essential costs such as food, clothing, or shelter.
Employer-Sponsored Health Plan Costs Could Rise More Than 8%
Mercer’s National Survey of Employer-Sponsored Health Plans found that employers expect the total cost of health benefits per employee to rise an average of 8.2% in 2027. These early results are based on responses from more than 1,800 employers, with more expected to take part in the final survey.
This would be the largest increase since 2003 and the fifth year in a row of higher-than-normal cost growth, following an average 8.8% increase in employer health care costs from 2025 to 2026.
Mercer’s projected 2027 8.2% estimate also reflects changes employers expect to make to control their health care spending, such as no longer covering GLP-1 drugs for obesity unless a person also has other health conditions. Without those changes, employers estimate that the cost of keeping their current plans would rise an average of 11%.
Several factors are contributing to higher costs. Hospitals and other health care providers are charging more for care. More people are becoming uninsured, shifting the uncompensated costs for their care onto the insured population. Prescription drug spending is also rising, including the growing use of GLP-1 medications for weight management. Mercer estimates that increased use of these medications alone adds about 1% to expected health benefit cost growth for 2027. However, this represents only short-term savings, since treatment of obesity in the present can offset higher costs of care down the road by reducing the risk of conditions associated with obesity, such as uterine and breast cancer, heart disease, diabetes, knee and hip problems, and more.
As private health insurance costs rise, many employers are looking for ways to limit how much more they spend. Nearly 6 in 10 employers surveyed by Mercer said they plan to make changes to reduce costs in 2027.
Those changes can affect what workers pay as well. Employers may choose plans with higher deductibles or out-of-pocket maximums. A separate Mercer survey also found that about two-thirds of large employers expect to increase the amount employees contribute toward their insurance premiums.
That can leave workers with lower paychecks while simultaneously facing higher costs when they need medical care.
Private Health Insurance Costs Are Also Rising in the Marketplace
People who buy their own coverage through the Marketplace will likely see another year of significant premium increases.
KFF reviewed proposed 2027 rates from 276 insurers across all 50 states and Washington, D.C. Insurers are requesting a median premium increase of 15% for 2027.
At this point, these rates are only proposed, so the final increases may be different. But the requests show that insurers expect their costs of providing health care to continue to rise.
This follows another year of especially large increases. For 2026, Marketplace insurers initially requested a median increase of 18%. The final median increase was higher at 20%.
KFF found that rising health care costs are the main reason insurance companies are requesting higher premiums for 2027. Insurers also pointed to inflation, health care worker shortages, and changes in the health status of people enrolled in Marketplace plans. As the costs of coverage rise, healthier people are more likely to drop coverage than sick people. Insurance works best when the premiums of those less likely to need care help to offset the costs of those more likely to need it. The net result is that when fewer healthy people are in the coverage pool, the burden of the cost of care falls more heavily on those who remain. Insurance companies are required to make a profit by design; therefore, premiums, deductibles, and out-of-pocket costs go up.
Changes to federal premium tax credits also affect Marketplace insurance costs. The enhanced premium tax credits that helped lower premiums for many people expired at the end of 2025. That, along with higher health care costs in general, has increased what people pay for coverage and who remains enrolled.
Open Enrollment Is Coming Soon
These projected increases come as many people prepare to choose health coverage for 2027. In Kentucky, kynect open enrollment for Marketplace coverage will still run from November 1, 2026, through January 15, 2027. Earlier federal rules would have shortened the enrollment period, but a federal court struck down that change. The ruling has been appealed, but the current open enrollment dates remain unchanged.
Many employers will also hold their annual open enrollment periods this fall, although the dates vary by employer. With costs expected to rise, this is a good time to look closely at more than the monthly premium. The Asclepius Initiative offers a free resource that explains how to compare deductibles, copays, coinsurance, provider networks, prescription drug coverage, and other costs before choosing a plan.
Rising Health Care Costs Affect More Than Premiums
Higher private health insurance costs are part of a much larger trend.
The U.S. spent about $5.3 trillion on health care in 2024, or more than $15,000 per person. Health care spending rose 7.2% in just one year and accounted for about 18% of the U.S. economy. That’s nearly twice the average of the other wealthy nations. These escalating costs impact both employers and workers.
Employers will spend more to provide health benefits, passing some of these higher costs on to workers, who will likely contribute more toward their monthly premiums. Deductibles, copays, and other out-of-pocket costs will also rise.
For families already dealing with higher costs for housing, food, transportation, and other basic needs, increases in health care expenses can put even more pressure on household budgets. They can also make it harder to pay for care when it is needed.
What Rising Private Health Insurance Costs Mean for Affordability
To some degree, employers and insurers can adjust their health plans to control spending, choosing options with more limited coverage and higher out-of-pocket costs. They can also reduce provider choice and require people to pay a larger share of their premiums.
But these changes shift more of the burden to the people covered under the plan, rather than addressing the underlying structural problems in health care financing. Another problem is that while aspects of this strategy may save money in the short term, it fails to address long-term health considerations over a person’s lifespan, increasing the risk of higher costs and worse outcomes down the road.
As the cost of private health insurance continues to rise, higher premiums and out-of-pocket costs will make it harder for people to keep their coverage and get the care they need, creating a spiral of ever-increasing health care costs and poorer health.