The cost of providing health insurance to North Carolina workers continues to climb — and employers are having an increasingly difficult time keeping up.
New national projections show that employer healthcare costs are expected to increase 9.5% in 2027, pushing the average cost above $19,000 per employee. That would mark another year of near-double-digit increases after healthcare cost growth more than doubled from 3.7% in 2022 to 8.8% in 2026.
When healthcare costs rise, they don't stay on an employer's balance sheet. Employers absorb much of the increase, with workers and their families feeling the impact through higher premiums, deductibles, copays and other out-of-pocket costs — as well as through larger deductions from each paycheck and less money available for wages and other benefits.
Benefits consultant Aon estimates employees will spend an average of $5,297 on healthcare in 2026, including payroll contributions and out-of-pocket expenses. That's $388 more than workers paid in 2025.
Employers Can't Keep Absorbing the Increases
The challenge isn't simply that healthcare costs are rising. It's that they have become increasingly difficult to predict.
A new survey from the Business Group on Health found that employers' actual health care costs have exceeded their forecasts for the past three years. Last year's increase was 2 percentage points higher than employers predicted, the group's largest forecasting miss outside the first year of the COVID-19 pandemic.
Employers cited a number of factors driving the volatility, including higher-cost prescription drugs such as GLP-1s, expensive cell and gene therapies, chronic conditions and higher prices from consolidated health systems.
The federal No Surprises Act was also cited as contributing to cost pressures. A recent study found that the law's arbitration process has resulted in $2.24 billion in additional payments to providers, with median arbitration awards reaching nearly 460% above median in-network rates in the final quarter of 2024. Those higher payments don't disappear — they ultimately contribute to higher health care costs and premiums.
The Costs Show Up in Workers' Paychecks
Employers have historically absorbed most of the cost of providing health insurance. Aon estimates employers are responsible for about 82% of health plan costs.
But there are limits to how much employers can absorb.
When healthcare costs rise faster than the economy, there is less money available for wages, hiring and investment. Employers may respond by increasing employee contributions, raising deductibles, changing benefits or steering workers toward lower-cost providers and medications.
Those strategies may help manage the immediate expense, but they don't make healthcare itself more affordable.
What's Driving the Increase?
There isn't one reason healthcare costs are rising.
Aon points to increased use of healthcare services, more chronic conditions, high-cost claims and greater spending on specialty medications. GLP-1 drugs are also contributing to higher prescription drug spending.
But the way health care is billed is another piece of the problem.
Artificial intelligence is increasingly being used to assist with medical documentation and coding. While AI has the potential to make health care more efficient, there are growing concerns that some systems are also being used to identify more severe diagnoses and increase coding intensity — potentially generating higher reimbursement without a corresponding increase in care.
North Carolina lawmakers are beginning to address these concerns. The question is whether new technology will be used to improve care and reduce administrative waste — or simply become another tool for driving up the price of healthcare.
Moving Costs Around Isn't the Same as Lowering Them
Employers are looking for ways to manage rising costs. Some are changing pharmacy benefit managers, steering workers toward lower-cost care and medications, or redesigning benefits. Others are shifting more of the cost onto employees.
Those strategies can help businesses manage their budgets, but they don't address the underlying problem.
A higher deductible doesn't make a hospital procedure cheaper. A larger employee premium contribution doesn't make prescription drugs less expensive. And changing benefit designs doesn't lower the prices hospitals and other providers charge.
Healthcare does not become more affordable by moving costs from one pocket to another.
If employers are facing another near-double-digit increase in healthcare costs in 2027, policymakers should be asking why.
That means addressing the underlying prices of care, hospital consolidation, billing practices and incentives that reward higher spending. It also means making sure laws intended to protect patients — like the No Surprises Act — actually protect patients without creating new opportunities to drive up costs.
Employers cannot absorb unlimited increases, and workers cannot keep paying more.
The solution to rising healthcare costs isn't simply finding new ways to shift the bill. It's making the bill smaller in the first place.
