News: Health insurance costs projected to hit 17-year high in 2027

Commercial health plans are facing the steepest single-year cost increase in 17 years, with the group market trend projected to reach 9% in 2027, according to PwC’s annual medical cost trend report, published June 11. The individual market trend is projected at 8.5%.

The study also supports a restatement of the group and individual trends up for 2026 from 8.5% and 7.5% to 9.0% and 8.5%, respectively.

PwC surveyed and interviewed actuaries at 27 health plans that cover more than 103 million employer-sponsored members and eight million individual marketplace enrollees.

The study cites five factors as driving commercial medial cost trends for 2027. They include:

1. AI-enabled documentation and coding tools, which allow providers to capture greater specificity and reimbursable severity without proportionate increases in care intensity.
2. Provider reimbursement pressure, which remains elevated due to inflationary pressure across provider underlying cost structures, reinforced by market consolidation limiting market alternatives.
3. Pharmacy trend continues to outpace overall medical trend, driven by advances in specialty drugs and expanding GLP-1 indications.
4. Behavioral health continues to outpace broader medical trend, with utilization surging 62% from 2018 to 2024.
5. The No Surprises Act (NSA) Independent Dispute Resolution (IDR) arbitration process has become a durable reimbursement inflator, with 2.6 million cases filed in 2025 and providers winning 88% of disputes.

Inflators are ranked based on PwC’s synthesis of health plan survey and interview responses, ordered by the greatest expected upward variance from historical medical cost trend.

Counterweights to these inflators are insufficient to offset the pressure, according to PwC’s report. However, cost-of-care initiatives can have an impact. The question is whether payers and employers can engage with them quickly and precisely enough to make a material difference.

Editor’s note: To read the full report, click here. To read additional coverage from Becker’s Payer Issues, click here.