What Is Driving 2027 Health Plan Costs?
Employers name catastrophic claims, specialty prescription drugs, GLP-1 drugs and cancer most often in the 2027 surveys. Pharmacy is growing about twice as fast as total cost of care, and hospitals take the largest share of each premium dollar.
Where the pressure comes from
The charts show how fast each cost line is growing and where the premium dollar goes.
Pharmacy
The 2026 Milliman Medical Index shows pharmacy cost rising 14.8 percent against 7.2 percent for the family-of-four total. Specialty drugs are the reason employers name most often.
GLP-1 drugs
Employers are deciding whether to keep, limit or drop coverage for weight-loss GLP-1 drugs. In one survey of 105 large employers, 67 percent covered them and 10 percent of those were likely to stop.
Hospitals and large claims
In AHIP’s breakdown hospitals take 40.7 cents of each premium dollar. A few catastrophic claims can also drive a small group’s renewal.
What an employer can do about it
Some drivers are outside your control. These are the parts that are not.
Michigan carriers report the same pressure
Blue Cross Blue Shield of Michigan reported a $1.03 billion loss in 2024, pharmacy claims up about 15 percent and drugs at 21 percent of premium. These are the carrier’s own figures.
Pharmacy benefit design
Pharmacy benefit design, specialty drug management and pharmacy benefit manager transparency are the main levers. Self-funded employers have the most room to act.
See it in dollars
Apply the range to your premium and divide by enrolled employees to see the per-person effect.
2027 market outlook questions.
Why is pharmacy growing faster than other costs?
Milliman reports pharmacy cost up 14.8 percent in its 2026 index, and employers name specialty drugs and GLP-1 drugs among their top concerns.
Are hospital prices the biggest cost?
In AHIP’s breakdown hospitals take the largest share of the premium dollar at 40.7 cents. AHIP is an insurer trade association and PhRMA disputes its breakdown, so treat it as one view.
Can a small employer do anything about drug costs?
A fully insured small group has limited control over drug pricing, but plan design, formulary and tiering choices, and marketing the plan can change the cost. Larger and self-funded groups have more levers, including pharmacy benefit design.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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