Employer-funded healthcare costs are expected to rise by 10% globally in 2027, marking the seventh consecutive year of double-digit increases, according to a new report from Marsh.
The professional services firm’s Health Trends 2027 report, based on a survey of 306 insurers across 69 markets excluding the US, found that nearly 40% of markets are expecting double-digit medical inflation next year.
The findings suggest that cost pressures are unlikely to ease in the near term, with 78% of insurers expecting medical cost increases to remain at current levels or rise further through to 2030.
Insurers identified advances in healthcare technology (57%) and a higher incidence of health conditions (47%) as the main factors contributing to rising costs.
The report also highlights the challenges facing employers as they seek to manage healthcare expenditure while maintaining access to employee health benefits.
More than a third (38%) of insurers expect employers to introduce moderate changes to benefit plans to contain costs during the next renewal cycle, while 32% anticipate a greater focus on aligning benefits expenditure with health outcomes and business priorities.
Hervé Balzano, president of Marsh Health and Benefits, said: ‘Seven consecutive years of double-digit global medical trend rates underscore the importance of a strategic, long-term approach to managing health benefits. Employers that act proactively can better support their people, strengthen workforce health, and make more sustainable decisions for the future.’
Cancer continues to be the largest contributor to global healthcare claims expenditure, with 70% of insurers ranking it among the three most expensive conditions by claims value.
Marsh said advances in targeted cancer treatments, alongside ageing populations and improving survival rates, are increasing the need for longer-term support for employees and their dependants.
However, the report identified gaps in preventive care coverage, with fewer than half of insurers providing cancer screening benefits. Breast cancer screening is covered by 49% of insurers surveyed, compared with just 30% for lung cancer screening.
Dr Lorna Friedman, senior partner for health transformation and sustainability at Marsh Health and Benefits, said employers needed to consider support across the full cancer pathway, including prevention, screening, treatment, return to work and survivorship care.
The report also examined the potential impact of AI on healthcare expenditure.
More than half of insurers (55%) believe AI will reduce employers’ medical costs over the next two to three years, particularly through improvements in claims processing and fraud detection. However, 23% remain uncertain about its financial impact, while 6% expect AI to increase overall costs.
Marsh suggested that employers could achieve further savings through benefit designs that encourage high-value care, improved management of high-cost claims and greater investment in prevention and early intervention.
Commenting on the UK market, where costs are expected to rise by 9%, Nick McMenemy, Marsh Health and Benefits UK leader, said: ‘Across the globe we are seeing the costs of healthcare rising. In the UK we have seen encouraging signals of a move to tackle health conditions earlier and remove the barriers to accessing care. However, this needs to be done with the state, employer and the individual taking collective responsibly for some of the preventable medical issues.
‘We need to stop looking at the impact of poor health and start to address the causes. If we can recognise these, we can put in place changes to mitigate these risks before they take hold. This is the very essence of good risk management, whether you are looking at organisational risks such as cyber risks, or human capital risks as highlighted in our People Risk Report 2026. Only then can we look to contain medical trend rates and make a meaningful impact on societal health overall.’
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