U.S. employers are preparing for rising healthcare costs next year, which could lead to reduced coverage of popular GLP-1 weight-loss drugs.
According to an Aug. 25 Business Group on Health’s 2027 Employer Healthcare Strategy Survey, employers are predicting a median 9.2 percent hike in healthcare costs for 2027. The report indicates that the projected cost growth could be reduced to about 8 percent through changes to employee benefit plans and other cost-mitigation strategies.
Employers expect a median cost growth of 8.5 percent for 2026, with a possible reduction to 7 percent after healthcare plan alterations.
Employers surveyed reported that pharmacy costs make up about 25 percent of healthcare spending and are projected to increase by 12 percent in 2026, driven in part by the rapid growth in GLP-1 medications.
As a result, many employers are taking more proactive measures to cut pharmacy costs, including tightening coverage of GLP-1 drugs for weight management and encouraging the use of lower-cost alternatives to specialty drugs.
The survey found that 60 percent of employers are covering GLP-1 drugs for treating obesity this year, down from 72 percent in 2025.
“An array of forces across the healthcare industry, from soaring hospital and drug costs to the rapid innovation of specialized treatments and unintended impacts from federal health policy changes, have contributed to a considerable unpredictability in cost,” Ellen Kelsay, president and CEO of Business Group on Health, said in the report.
“This represents an unfortunate new reality for employers, who now face growing difficulty in budgeting and forecasting.”
Some employers said they would encourage the introduction of lower-cost GLP-1 biosimilars if clinically appropriate.
A July report from Gallup showed that 11 percent of U.S. adults are currently taking GLP-1 medications for weight loss—an increase from just 3 percent in 2024. Those results are based on an online survey of more than 5,000 adults conducted from May 28 through June 5 across all 50 states.
It also found that while the U.S. adult obesity rate has dropped to 36.4 percent this year after peaking at 39.9 percent in 2022, the percentage of those diagnosed with diabetes has remained steady since 2023.
While GLP-1 drugs have notably affected pharmacy coverage costs, the Business Group survey shows that for the fifth year in a row, cancer is the top condition affecting healthcare spending. More than 92 percent of employers named cancer as one of their top three conditions. For this year, more than 70 percent reported cancer treatment as their top healthcare expense—up from 58 percent in 2025.
Additionally, 62 percent of surveyed employers reported that hospital price increases are also driving up coverage costs, while 48 percent attributed rising coverage rates to outpatient facility costs.
Employers plan to mitigate rising healthcare costs by leveraging the request-for-proposal (RFP) process to secure lower pricing, strengthening prevention and primary care, and eliminating underperforming vendors.
The report noted that over the past three years, actual costs of employee medical care have exceeded employers’ predictions. As a result, the Business Group on Health forecasts that healthcare costs could increase by a cumulative 76 percent from 2018 to 2027—nearly double the rate of inflation for the same period.
To prepare for the anticipated wave of rising costs, 26 percent of employers surveyed said that they would offer employees an alternative healthcare plan in 2027, while another 31 percent are considering one for 2028 or 2029.
