Aon plc AON recently announced that it expects U.S. employer health-care costs to rise 9.5% in 2027, pushing average plan costs above $19,000 per employee. The forecast, based on its Health Value Initiative database, covers more than 1,100 employers, 7.9 million employees and $135 billion of 2026 health-care spending. Aon expects many companies to take steps to soften that increase.
The pressure is broad. Higher use of medical services, more chronic illness and a growing number of expensive claims are lifting spending. Prescription drugs remain another major driver, especially specialty medicines and GLP-1 therapies, as their use expands into cardiovascular disease, sleep apnea and chronic kidney disease. Aon also pointed to more detailed provider documentation and coding, including technology-assisted coding, as a factor that can raise billed charges in some cases.
Employers are already carrying most of the burden. Their average cost rose 8.8% in 2026 to $14,432 per employee, while employee payroll contributions increased 6.4% to $3,130. Aon says employers now fund about 82% of total plan costs, making health benefits a bigger business-planning issue. The report says 2027 costs would extend a long period of healthcare inflation that employers have faced.
Why This Matters Beyond the Benefits Budget
The size and persistence of the increase are what make Aon’s findings important. The projected rise would mark a fourth straight year of employer health-cost growth close to double digits. Even after employers changed plan designs and used cost controls, total plan costs increased 8.3% in 2026 to $17,562 per employee. The middle 50% of employers saw increases ranging from 5.5% to 11.5%, showing that the pressure is not confined to a small group.
Employees are feeling it too. Their total health spending is expected to reach $5,297 in 2026, including $3,130 in payroll premiums and $2,167 in out-of-pocket costs. Out-of-pocket spending alone rose 10.2%. Across industries, employer cost increases ranged from 6.5% in health care to 9.8% in finance and insurance.
Another year of steep increases can force companies to rethink benefits, hiring and compensation. Employers may raise contributions, change deductibles, narrow provider networks or lean harder on care-management programs. They also have stronger incentives to scrutinize pharmacy spending, network contracts and high-cost claims. In short, medical inflation is becoming a financial-planning problem, not simply a benefits-department problem. That squeeze can also affect workers’ budgets and spending patterns.
What it Means for Companies Like AON, WTW, UNH & CNC
For AON and Willis Towers Watson Public Limited Company WTW, rising health costs can create more demand for their services. Employers need help redesigning benefits, comparing networks, managing pharmacy costs and using data to identify spending problems. Aon’s Health Solutions generated $818 million of second-quarter 2026 revenues and 5% organic growth. Its response includes tools such as Network Analyzer, designed to examine network performance, utilization and cost drivers. WTW, which currently has a Zacks Rank #2 (Buy), is seeing the same tailwind: its Health business posted 8% organic growth in the second quarter, and management specifically cited high health-care inflation as a demand driver for its specialty solutions.
The Zacks Consensus Estimate for Willis Towers Watson’s 2026 and 2027 EPS are currently pegged at $19.77 and $22.57, signaling 15.8% and 14.1% year-over-year growth, respectively. Both witnessed nine upward revisions over the past month, against no movement in the opposite direction. WTW beat earnings estimates in each of the past four quarters with an average surprise of 3.9%.
Willis Towers Watson Public Limited Company Price, Consensus and EPS Surprise
Willis Towers Watson Public Limited Company price-consensus-eps-surprise-chart | Willis Towers Watson Public Limited Company Quote
While higher costs can support demand for AON and WTW’s services, the equation is different for health insurers. UnitedHealth Group Incorporated UNH has already said commercial medical costs remain stubbornly high and above expectations. When UnitedHealthcare bears the claims risk, faster utilization and drug inflation can push up the medical care ratio unless premiums keep pace. The company is responding through benefit design, care-management models, network curation and selective market participation.
Also, UNH has an important cushion: its self-funded commercial business is much larger than its risk-based business. It ended the second quarter with around 22.3 million commercial fee-based members versus only 7.7 million commercial risk members. Meanwhile, improving cost trends and management actions helped lower UNH’s medical care ratio to 86.7% in the second quarter from 89.4% a year ago.
UnitedHealth currently sports a Zacks Rank #1 (Strong Buy). The consensus estimate for its 2026 and 2027 EPS are currently pegged at $19.69 and $22.43, indicating 20.4% and 13.9% year-over-year increases, respectively. Both estimates have seen two upward revisions over the past month, with no cuts.UNH beat earnings estimates in each of the past four quarters with an average surprise of 12.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
UnitedHealth Group Incorporated Price, Consensus and EPS Surprise
UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote
The impact is different for insurers with less exposure to employer-sponsored commercial plans and greater dependence on government programs.
Centene Corporation CNC is one such company with less direct exposure to employer-sponsored coverage because its commercial business is primarily concentrated in the ACA Marketplace. Still, many of the same medical-cost pressures apply. Centene nevertheless improved its second-quarter commercial health-benefits ratio to 79.2% from 90.6% a year ago, helped by better pricing and risk transfer. Management is already taking a state-by-state approach to 2027 Marketplace pricing, with margin restoration remaining the priority rather than pursuing membership growth at any cost. Its Medicaid HBR was 93.9% in the second quarter, with management citing progress in medical-cost management.
Centene also currently sports a Zacks Rank #1. The consensus mark for its 2026 and 2027 EPS is currently pegged at $4.89 and $5.35, indicating 135.1% and 9.4% year-over-year jumps, respectively. These estimates witnessed nine upward revisions each over the past month, against no downward movement. CNC beat earnings estimates in each of the past four quarters, with an average surprise of 151.3%.
Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote
Final Words
Overall, persistent health-care inflation should continue to support demand for cost-management, benefits consulting and data-driven solutions, benefiting firms such as WTW. At the same time, health insurers will need disciplined pricing, tighter medical-cost controls and careful market participation to protect margins. UNH and CNC are already showing signs of improvement in managing medical expenses and pricing their businesses appropriately. Against this backdrop, WTW, UNH and CNC remain attractive names to add to your portfolio, with all three currently carrying favorable ratings.
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This article originally published on Zacks Investment Research (zacks.com).