Large employers drop health benefits as costs rise
U.S. employers and small businesses are cutting health insurance coverage as costs escalate, contributing to a broader rise in the uninsured population. In California, cuts to the ACA marketplaces and Medicaid are projected to nearly double the number of uninsured residents under 65 from 2.4 million to 4.6 million by 2030. Experts warn that this trend will lead to more crowded hospitals and increased costs for the general public. Small businesses operating on thin margins report that skyrocketing plan costs hinder their ability to invest or attract new staff.
What changed
Recent data reveals specific projected uninsured growth in California and warnings that coverage losses will increase costs for all patients.
Live updates
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Rising Healthcare Costs Drive Surge in Uninsured Americans
U.S. employers and small businesses are cutting health insurance coverage as costs escalate, contributing to a broader rise in the uninsured population. In California, cuts to the ACA marketplaces and Medicaid are projected to nearly double the number of uninsured residents under 65 from 2.4 million to 4.6 million by 2030. Experts warn that this trend will lead to more crowded hospitals and increased costs for the general public. Small businesses operating on thin margins report that skyrocketing plan costs hinder their ability to invest or attract new staff.
Why it matters
Mercer previously projected an average cost increase of 8.2% per employee for 2027, the largest spike in two decades. These financial pressures affect both large organizations and small businesses. The resulting loss of coverage shifts the financial burden of care toward public infrastructure.
What is confirmed
- Cuts to Medicaid and ACA marketplaces are expected to increase the number of uninsured Californians under 65 from 2.4 million to 4.6 million by 2030.
- Rising health plan costs are creating difficulties for small businesses in attracting employees and making investments.
Still unconfirmed
- Loss of health insurance coverage will lead to more crowded hospitals and higher costs for everyone.
What to watch next
- Data on the actual number of small businesses dropping coverage in 2026
- Updates on California's efforts to mitigate the surge in uninsured residents
confidence 90%Sources used for this update (6)
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Large Employers Drop Health Benefits as Costs Spike
Large employers are cutting health benefits as financial pressures mount and healthcare expenses surge. Mercer's annual survey of employer-sponsored health plans projects an average cost increase of 8.2% per employee in 2027. This marks the largest projected spike in two decades, matching the biggest increase since 2003 for both employer and worker health plan costs. The rising expenses threaten coverage availability nationwide as organizations struggle to manage escalating prices, forcing workers to potentially pay more next year.
Why it matters
The rising price of providing healthcare threatens to alter coverage availability for workers across the country. Mercer tracks these metrics through its annual survey of employer-sponsored health plans. Financial pressures are mounting as organizations grapple with the highest cost jump seen in over twenty years.
What is confirmed
- Mercer's annual survey of employer-sponsored health plans projects that the total cost of health benefits per employee will increase by an average of 8.2% in 2027.
- The projected 8.2% increase represents the biggest jump since 2003 for employer and worker health plan costs.
Still unconfirmed
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What to watch next
- Finalization of 2027 employer health plan offerings
- Additional corporate disclosures regarding benefit reductions
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Employer Health Costs Expected to See Sharpest Increase in 20 Years
Employer health benefit costs are projected to experience their largest spike in two decades, with a survey revealing an expected jump of 8.2% in 2027. This represents the biggest increase since 2003 for both employer and worker health plan costs. The rising expenses are prompting large employers to drop health benefits altogether as financial pressures mount. The trend threatens to alter coverage availability for workers across the country as organizations struggle to manage the escalating price of providing healthcare.
Why it matters
Health benefit costs have historically fluctuated, but the projected 2027 jump marks a significant departure from standard annual increases over the past twenty years. Organizations absorb a substantial portion of these expenses, which directly impacts corporate budgets and total employee compensation strategies. As expenses climb to levels not seen since 2003, companies face difficult operational choices regarding employee benefits.
What is confirmed
- Health benefit costs are expected to jump 8.2% in 2027, the biggest increase since 2003.
- Employer health costs are expected to see their sharpest increase in 20 years.
- Large employers are dropping health benefits as costs rise.
Still unconfirmed
- Specific impacts on individual industry sectors beyond large employers remain unquantified in current surveys.
What to watch next
- Actual 2027 health plan enrollment and cost adjustments by major corporations
- Further survey data detailing which specific industries are dropping health benefits most frequently
confidence 95%Sources used for this update (8)
- The Washington Post — Health insurance costs projected to spike next year by most in two decades
- The New York Times — Employer Health Costs Are Expected to Spike in 2027
- The Hill — Employer health costs expected to see sharpest increase in 20 years: Survey
- mercer.com — Survey: Health benefit costs expected to jump 8.2% in 2027, the biggest increase since 2003
- KXAN Austin — Survey: Biggest spike in health benefit costs over past two decades expected in 2027
- KTLA — Employer healthcare costs expected to spike next year
- Axios — Large employers drop health benefits as costs rise
- CBS News — Employer and worker health plan costs expected to jump in 2027