Commercial health plans are facing the steepest single-year cost increase in 17 years, with the group market trend projected to reach 9% in 2027, according to PwC’s annual medical cost trend report published June 11.
PwC surveyed and interviewed actuaries at 27 health plans that cover more than 103 million employer-sponsored members and 8 million individual marketplace enrollees.
Eight notes:
- PwC projects a 9% medical cost trend for the commercial group market in 2027 and 8.5% for the individual market. The firm said the 9% rate is the highest medical cost trend in 17 years.
- PwC also revised its 2026 projections upward, lifting the group trend to 9% from 8.5% and the individual trend to 8.5% from 7.5%.
- The 9% and 8.5% projections don’t capture the fallout from the expiration of the enhanced ACA premium tax credits at the end of 2025, meaning premium pressure in the marketplace could run higher than 8.5% as insurers price for a smaller and sicker risk pool.
- PwC identified five inflators driving the 2027 trend: provider adoption of AI documentation and coding tools, provider reimbursement pressure and consolidation, pharmacy spending, behavioral health utilization, and out-of-network payment disputes under the No Surprises Act.
- Nearly 70% of surveyed plans ranked providers’ use of AI documentation and coding tools among their top three inflators, and roughly 20% named it the single largest.
- More than 85% of participants said the 2027 pharmacy trend would outpace the overall medical trend. PwC reported that GLP-1 prescriptions filled in December 2025 were nearly double the volume filled in December 2024.
- Behavioral health utilization has risen 62% since 2018 as more patients enter treatment and stay in it longer.
- The traditional deflators that have tempered the cost trend in recent years, including biosimilars, generic drugs and site-of-care optimization, are now built into health plans’ baseline cost assumptions, leaving fewer new sources of relief, according to PwC.
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