Employers are heading into the most expensive benefits renewal in more than two decades, and many still can’t explain where the money went.
Employer health benefit costs are projected to rise 8.2% per employee in 2027, the steepest increase since 2003, according to Marsh’s (formerly Mercer) 2026 National Survey of Employer-Sponsored Health Plans, which drew responses from more than 1,800 US employers. Without planned cost-reduction measures, the average increase would be 11%. About two-thirds of large employers with 500 or more employees expect to pass more of that cost to workers through higher premium contributions.
Those cost-shifting strategies reduce what an employer absorbs directly. They do not explain what produced the higher renewal number in the first place.
That gap is what Larry Hightower, founder and CEO of Atlanta-based Vxtra Health, says defines the real problem. Vxtra operates a healthcare model for self-insured, middle-market employers that integrates physician leadership, pharmacy management, care navigation, and claims administration. The company’s argument, laid out in a new commentary, is that employers routinely reach renewal with a bill they cannot adequately account for. The systems managing their health plan data, Hightower argues, were built to process transactions, not to surface patterns in how spending develops.
“That is not what happens in today’s world,” Hightower said. “All the old systems are transaction systems. They’re not analytics.”
For self-insured employers, the visibility gap has a second consequence. Stop-loss insurance, which protects self-funded plans from catastrophic individual claims, is priced partly on the employer’s broader claims exposure. Hightower argues that when a stop-loss carrier lacks accurate, timely data, it prices conservatively to compensate. “If the stop-loss carrier doesn’t have accurate data to manage their exposure to a large catastrophic claim, they’re going to price the market higher in order to protect themselves,” he said.
That dynamic is consistent with what stop-loss markets have been showing. January 2025 claims trends ran 9.2 percentage points above the prior five-year average, according to Tokio Marine HCC, with the carrier warning that the tightening market is likely to persist through at least 2027.
Vxtra’s model, as described in the commentary, uses near-real-time pharmacy and claims data to give care teams earlier visibility into where spending is developing. The 2027 cost environment is being driven by a convergence of factors. GLP-1 drug adoption, AI-assisted billing, and disputes under the No Surprises Act’s Independent Dispute Resolution (IDR) process are each estimated to add roughly a percentage point to trend, according to Marsh’s actuaries. Earlier visibility into claims does not address those structural drivers directly, but it gives employers a basis for identifying which categories of spending are developing and when to investigate.
The cost problem and the visibility problem are not separate issues. The 2026 Pulse of the Purchaser survey from the National Alliance of Healthcare Purchaser Coalitions, which polled 408 employers, found that those with full access to medical and pharmacy claims data deployed an average of 11.9 high-value purchasing strategies. Those without that access deployed significantly fewer. Employers who lack complete claims data are also more likely to anticipate the steepest cost increases, with fully insured employers, who typically have the most constrained data rights, showing the largest gap.
A third of employers in the 2025 edition of the same survey said they could not access complete claims data, and four in ten reported that vendors had refused to provide it.
Hightower frames the problem in operating terms. Claims accumulate throughout the plan year as employees receive care. Contract terms shape how those claims are priced. But many employers receive updates only every 90 days or six months, leaving finance and benefits leaders reviewing one of their largest cost lines well after most of the spending has already occurred.
That lag has consequences beyond the benefits budget itself. “What happens is they don’t make any decisions until they understand what’s happening with their employee benefits,” Hightower said. “In the case of this year, they delay hiring decisions, they don’t give promotions."
Vxtra Health did not provide client outcomes or independently verified cost savings data to support its claims about the model’s performance.
