Soaring commercial health care costs are driving a wave of major employer cutbacks heading into 2027, forcing workers to shoulder significantly higher out-of-pocket medical expenses. According to consulting firm PwC, commercial health care costs are expected to rise 9% next year, while insurer Aon projects an even higher increase of 9.5%, pushing average costs above $19,000 per employee.
Walt Disney, Starbucks, and Bloomberg Cut Back Health Benefits for 2027
Consulting firm Marsh reported that 59% of employers plan to make cost-cutting changes to health benefits in 2027, with about two out of three large employers expecting to increase employee premium contributions.
Health benefits remain a dominant factor for job seekers and current employees. Among employed adults and job hunters, 87% say the health plan attached to a job matters when deciding whether to take an offer or stay put, according to a report by ValuePenguin senior staff writer Maggie Gunara. At the same time, ValuePenguin research from July shows that 42% of 2,001 surveyed adults can comfortably afford less than $100 a month for health insurance outside an employer plan, while 23% can afford between $100 and $249.
Specific Plan Changes at Major Companies
Employers are deploying a variety of restrictive measures to combat rising medical trends. Walt Disney Co. announced it will stop covering working spouses under its health plan in 2027 if those spouses have access to coverage through their own employers, a policy affecting more than 200,000 U.S. workers. Starbucks shocked employees during open enrollment by nearly doubling insurance prices for some workers, lowering its employer contribution, and ending coverage for GLP-1 weight loss drugs starting in October. Bloomberg LP is requiring employees to start paying monthly premium contributions for the first time in company history.
Professional services firm Deloitte is halving paid parental leave to eight weeks for workers in its “Center” talent segment—covering internal IT, finance, and administrative functions—effective January 1. Deloitte is also ending a $50,000 adoption and surrogacy reimbursement program that covered IVF-related costs for those workers, alongside terminating pension accruals after December 31. Meanwhile, the Dallas City Council scheduled a vote for September 16 on a proposal to eliminate its copay insurance plan and strip GLP-1 weight loss coverage for employees.
Why Cost Shifting Fails to Address Underlying Health Expenses
“We’re just changing who pays for it,” Zellers noted on LinkedIn. Experts argue that companies need to rethink traditional group insurance models entirely. “The higher-cost medications may be 10% of usage but consume 90% of dollars,” Pruitt said.
To combat this, some employers are exploring alternatives like direct-to-patient pharmacy options through platforms resembling Amazon Pharmacy and Mark Cuban Cost Plus Drug Co. for high-cost drugs, bypassing traditional insurers. Another rising alternative is Individual Coverage Health Reimbursement Arrangements (ICHRAs). An Employee Benefits Research Institute (EBRI) study revealed that one in three businesses offering health benefits is likely to adopt an ICHRA over the next two years. Under these plans, companies provide a fixed monthly tax-free reimbursement for workers to purchase individual insurance, though transition hurdles and employee familiarity with group plans remain obstacles.
Did You Know? According to a survey by consulting firm Marsh, roughly 59% of employers plan to implement cost-cutting adjustments to their health benefits for 2027, including higher deductibles and increased employee premium shares.
Frequently Asked Questions
Why are employer health care costs rising so sharply for 2027?
PwC and Aon project commercial health care costs to climb between 9% and 9.5% due to soaring medical and high-cost prescription drug trends, pushing average employer costs past $19,000 per employee.
What changes is Walt Disney making to spousal health coverage?
Starting in 2027, Walt Disney Co. will stop providing health coverage to working spouses of its U.S. employees if those spouses can access insurance through their own jobs.
What are ICHRAs and why are companies considering them?
Individual Coverage Health Reimbursement Arrangements (ICHRAs) give employees a fixed monthly tax-free reimbursement to buy their own individual health insurance policies, offering an alternative to traditional, one-size-fits-all group plans.
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