Employers Face the Biggest Health Cost Rise Since 2003. Vendors Without Hard Outcomes Go First

Benefits teams are setting 2027 budgets right now, and the numbers in front of them are the worst in two decades. Mercer’s survey of more than 1,800 employers projects health benefit costs per employee rising 8.2% in 2027 even after cost cutting, the largest increase since 2003 [1]. Business Group on Health’s large employers project a 9.2% trend before plan changes, and among them GLP-1 coverage for weight loss fell from 72% to 60% in a year, with not one employer planning to add it for 2027 [2][3].

Our read: 2027 is the year employers stop paying for digital health on faith. Vendor lists are one of the few lines a benefits team can cut quickly, and for companies selling wellness, chronic condition, mental health or GLP-1 programs, that moves the renewal conversation from engagement to evidence.

How fast are employer health costs rising?

• Mercer (2 September 2026): an average 8.2% increase per employee in 2027 after planned changes, against about 11% with no action. It is the fifth straight year of elevated cost growth and the highest of the five; employers had projected 6.7% for 2026 [1].
• Business Group on Health (25 August 2026): a median trend of 9.2% for 2027, about 8% after plan design changes, from 127 large employers covering 11 million lives. Actual costs have exceeded employer predictions for three straight years [2].
• What is driving it: high-priced diagnostics and treatments, especially new cancer therapies; provider and hospital consolidation; AI-enabled billing that raises claim volume and coding levels; and GLP-1s, which Mercer estimates add about one percentage point on their own [1]. Pharmacy is now about a quarter of large employers’ health spending [2].

Employers are passing some of it on. 59% plan cost-cutting changes such as higher deductibles, and about two-thirds of large employers plan to raise employees’ share of premiums [1].

What is happening to GLP-1 coverage?

• Coverage is shrinking. Among Business Group on Health’s employers, coverage of GLP-1s for weight loss fell from 72% in 2025 to 60% in 2026, about 14% have dropped or plan to drop it in 2027, and “not a single employer” plans to add it for 2027 [3].
• Those who keep it are tightening it. Mercer found 6% of large employers dropped coverage in 2026, another 5% plan to or are considering it for 2027, and 27% tightened utilization controls this year or plan to [4]. Common conditions include objective eligibility checks using biometric data, required participation in a weight management program and limits on who can prescribe [5].
• Employers want proof they are not seeing yet. More than half of covering employers expect significant clinical benefits, but few have seen supporting evidence in their claims [5].

That combination creates a specific opening. Employers that keep GLP-1 coverage need programs that check eligibility, support adherence and lifestyle change, protect lean mass, and help people maintain results after stopping, and they need data to show it. We covered the clinical side in GLP-1 digital weight management.

Why is vendor sprawl now a budget problem?

In Solera Health’s April 2026 survey of 106 benefits leaders at employers with at least 1,000 staff, 42% said they manage eight or more digital health vendors, 90% spend more than $1 million a year managing them, and about 68% incur costs beyond the contracted fees [6]. Solera sells a network that consolidates vendors, so it has an interest in the finding, but the direction matches what benefits consultants and health systems describe [6].

Every separate app adds a contract, a security review, an eligibility file, a communications plan and a login for employees to forget. When the budget tightens, the easiest saving is the vendor with the weakest evidence and the smallest engaged population.

Which programs have independent evidence?

The Peterson Health Technology Institute (PHTI) reviews digital health categories for employers and payers, using published studies and company-submitted data [7]:

PHTI’s GLP-1 guidance for employers recommends phased coverage (strict initiation criteria, adherence support during maintenance and supported discontinuation) and performance-based contracts that require virtual vendors to prove clinical outcomes [11].

The message for vendors is consistent: categories with independent evidence of outcomes are easier to defend, and those without it are the first to be cut.

What should digital health vendors do before renewal?

1. Report outcomes in the employer’s own population. Clinical change, cost avoided and comparison with non-participants, not app opens and logins. Expect to be asked for it.
2. Offer to put fees at risk. Performance-based contracts are becoming the norm for GLP-1 and chronic condition programs [11]. Vendors who propose them first look confident; those who refuse look expensive.
3. Plug into fewer front doors. Integrate with the platforms employers already run, such as navigation, benefits hubs and health plans, instead of asking employees to download another app [6].
4. Help manage GLP-1 spend. Eligibility verification, adherence and lifestyle support, lean mass protection and maintenance after discontinuation are what employers who keep coverage now require [5][11].
5. Lower the effort for members. Every manual step, from logging to device pairing, cuts participation. Programs that use data people already generate on their phones and wearables keep more members engaged with less effort.

The short version

Employers expect health costs to rise about 8% in 2027 after cuts and about 11% without them, the largest increase since 2003 and the fifth steep year in a row [1][2]. GLP-1 coverage for weight loss fell from 72% to 60% of large employers and no one plans to add it [3]. With 42% of employers managing eight or more digital health vendors [6], the vendors that stay will be the ones that show outcomes in the employer’s own data, put fees at risk, plug into existing platforms and help control GLP-1 spend [8][9][10][11].