Commercial healthcare costs are on track to rise 9% in 2027, according to a new analysis from PwC. That would be the highest medical cost trend in nearly two decades. The individual market is projected to increase 8.5%. PwC also revised its 2026 estimates upward, bumping the group market trend from 8.5% to 9% and the individual market from 7.5% to 8.5%.
The findings come from a survey of actuaries at 27 U.S. health plans, covering more than 103 million employer-sponsored members and 8 million ACA marketplace members.
AI Is Making Provider Billing More Expensive
The most notable finding is how health plans view AI. Seventy percent of health plans rank provider AI tools as a top-three cost driver. The issue is not that AI is providing more or better care. It is that AI-assisted documentation and coding tools help providers capture more billable detail, supporting higher-severity coding and higher reimbursement per encounter, without a corresponding increase in care intensity.
A study at UCSF Health found that adoption of an AI scribe tool was associated with higher billing units per encounter, higher billing units per week, and modestly more patient visits, with no increase in claim denials. In other words, payers are paying more per claim with no offsetting mechanism in place.
PwC recommends that health plans shift payment integrity work upstream, reviewing high-risk claims before payment rather than chasing recovery after the fact.
Drug Costs Keep Climbing
More than 85% of survey participants cited a 2027 pharmacy cost trend that outpaces the overall medical trend. Specialty drugs and GLP-1 therapies are major contributors. Traditional cost controls like biosimilars, generics, and site-of-care optimization are not enough to materially offset the trend, and many plans have already baked those savings into their baselines.
Behavioral Health Demand Has Surged
Behavioral health utilization rose 62% between 2018 and 2024, and climbed another 10% from 2023 to 2024 alone. Visits went from 828 per 1,000 people in 2018 to 1,346 per 1,000 in 2024. Stimulant prescriptions rose 53.3% and antipsychotic prescriptions rose 45.4% over the same period.
The No Surprises Act Is Inflating Out-of-Network Payments
Under the No Surprises Act’s arbitration process, providers won 88% of payment disputes against health plans in 2025, across 2.6 million cases filed. PwC recommends that payers work to reduce reliance on out-of-network providers in high-dispute specialties rather than continuing to absorb arbitration losses.
What This Means for Employers
For businesses that offer group health coverage, a sustained 9% annual cost trend compounds quickly. The traditional levers that have historically softened renewal increases are largely tapped out. Employers heading into 2027 renewals should expect carriers to price accordingly and should work with their brokers early in the planning cycle to model options.