Healthcare costs in the U.S. are climbing faster than wages, placing growing financial pressure on workers and employers with no end in sight for 2027. For the more than 150 million Americans who rely on job-based insurance, the cost burden has become increasingly unsustainable. This year alone, workers faced a 9% average increase in their share of family health plan costs, reaching $7,471 annually, according to a new survey by KFF, a health policy research organization. The increase follows a 7.6% rise the previous year, while employers now pay an average of $28,303 for family coverage—a 5% jump from last year and the fourth consecutive year of steep hikes.
Employers Shift Health Costs to Workers
Employers are responding by shifting more expenses onto workers. Nearly half (44%) of large companies with at least 200 employees raised worker premium contributions this year. Others are increasing deductibles, restricting provider networks, or imposing preapproval requirements for medical services to control costs. Meanwhile, workers’ wages have not kept pace. While earnings grew by 3.7% this year, overall inflation stood at just 2.7%, meaning healthcare expenses are outstripping both wage growth and general price increases. This leaves many employees with less disposable income after accounting for insurance costs.
Small businesses are particularly hard hit. Workers at companies with fewer than 200 employees now face average deductibles of $2,624, compared to $1,772 at larger firms. Even at big companies, workers now cover 27% of family plan costs, up slightly from the previous year. Consulting firms predict even sharper increases ahead. AON projects employers could face 9.5% higher premiums in 2025, while Marsh estimates an 8.2% jump—the largest since 2003. The primary drivers include rising service utilization, soaring drug prices, and increasing hospital costs. A report from the Business Group on Health also highlights the role of artificial intelligence in optimizing provider billing practices.
Employers Test New Cost-Control Strategies
Some employers are experimenting with new cost-control measures. A small number are testing tiered networks, where lower copays apply to providers with better pricing or quality outcomes. However, only 4% of companies have sustained this approach due to difficulties in tracking provider costs. Others are investing in primary care infrastructure. Phifer Inc., an Alabama-based manufacturer, managed to keep its health costs flat this year by offering on-site clinics and direct contracts with doctors.
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Despite these efforts, many employers are running out of viable options. Jim Winkler, chief strategy officer at the Business Group on Health, warned that workers will likely see higher out-of-pocket costs when open enrollment begins. “When open enrollment starts, most people will see their out-of-paycheck costs and probably their out-of-pocket costs going up,” he stated. The rising cost of job-based healthcare has become a major voter concern, ranking alongside inflation and the economy in midterm election polling. Unlike debates over Affordable Care Act plans, this issue affects 150 million Americans with limited policy solutions available.
Industry Blames Healthcare System for Spikes
Industry leaders argue the problem extends beyond employer decisions. Elizabeth Mitchell, CEO of the Purchaser Business Group on Health, blamed the healthcare industry itself for failing to control costs. “The industry is doing absolutely nothing to control costs,” she said, pointing to relentless price increases from hospitals, drugmakers, and insurers. The financial strain on employers goes beyond traditional premiums and deductibles. The KFF survey revealed that 29% of all companies reported that covering GLP-1 drugs, including weight-loss medications like Ozempic and Wegovy, had a significant impact on drug costs. With demand surging, employers are considering access restrictions or cost-shifting measures, though many fear backlash for limiting coverage of chronic condition treatments.
Another major obstacle is the lack of pricing transparency. Nearly 29% of large employers reported difficulties obtaining clear data on health plan payments for medical services or comparing provider costs. Without this information, companies struggle to negotiate better rates or implement cost-saving measures like tiered networks. Some companies are turning to alternative strategies to cut expenses. About 9% of businesses with 50 or more workers now purchase prescription drugs from outside the U.S., often through Canadian or international pharmacies, to reduce costs. While this approach remains rare, it reflects the growing desperation among employers to find savings amid rising drug prices. Legal and logistical challenges, such as shipping delays and regulatory risks, limit its widespread adoption.
