Health costs will rise, and we are planning to take it head on.
Every planning season has a mood. And heading into 2027, the mood is to brace for impact. Health costs are climbing faster than in more than two decades. The pressure to manage the costs is brought up in every renewal discussion, budget meeting, and “what are our options” conversation that happens during open enrollment.
The media coverage of the predicted price increases is treated like a math problem: ‘Costs are up double digits, so how do we find the savings?’
What happens to the employees
For the people who have to decide which plan to take and what risk they can afford, it’s a life decision. Do they fill the prescription this month? Can they take their kid to the specialist? It’s how much is left in their paycheck after the deductions, and how big will the bill be when someone gets sick.
When costs rise, the temptation is to move to a higher deductible plan, or deal with a larger share of the premium. Any one move looks small, but it adds up to more financial risk on households that are the least equipped to carry it. And thinner coverage changes behavior. People skip appointments, delay tests, and ration medication. Often, the result is bigger claims in the long run. The savings in a paycheck can disappear and become irrelevant pretty fast.
For employers, there is a different concern
On the other side of the table, costs are real, and they are spread out across the year. There are more expensive (and more effective) treatments, a shrinking and consolidating set of providers with more negotiation, and a new category of high-demand drugs adding new pressure to the plans this year. You cannot cost-cut your way out of it all because predictions indicate the costs will rise again in 2028 and 2029.
But an employer’s stake goes beyond the budget. Benefits are the clearest ways a company can signal how it treats its people. In a year when nearly every competitor is making their plans worse, the employer who holds the line — or even improves — stands out. Candidates compare coverage line by line. Employees remember who protected theirs in the year everyone else’s shrank. That memory (and reputation) becomes retention, referrals, and trust. Say what you want about the job market, but this matters when competing for talent.
As fiduciaries, we look at both sides of the table.
We’re bound to act with prudence and in the genuine interest of the people the plan covers — to ask whether health-plan dollars are being spent well, whether decisions truly serve participants, whether the plan is paying fair prices, and whether cost-cutting is adding undue risk. Doing right by participants and employers are not separate initiatives.
That standard means being deliberate and managing the true cost drivers with precision rather than blunt cuts, steering people toward high-quality care rather than just higher deductibles, and designing around long-term value instead of the lowest possible monthly premium. The prudent choice is usually the one that keeps the plan working transparently and focused on the people who depend on it.
Before you sign off on next year’s plan, ask “what does this cost the people who work here” — and “can we defend this decision as one made in their interest?”
2027 is going to be expensive no matter what anyone decides. The only real choice is what your benefits look like on the other side of it. A cost to manage down, or a commitment you honored to your teams. As fiduciaries, we know which one we’re obligated to choose, and we think it’s the better business decision, too.
As fiduciaries to employers who are in the thick of it, we see it differently. For us, it’s a question of how the people on the other side of the plan (the employees, recipients of benefits) are going to handle it and what we owe them. You can read the recent employer survey data and what the hard numbers behind 2027’s costs will look like here.
