Large Employers Are Cutting Health Benefits as Costs Surge. Workers Could Pay More Next Year.

Some of America's largest employers are scaling back health benefits as another steep increase in medical costs forces companies to reconsider how much of the burden they can continue absorbing.

Major corporations including Disney, Starbucks and Deloitte are making changes to employee benefits, according to an Axios report. The changes offer an early glimpse of what could become a broader shift in workplace health coverage as employers prepare for health care costs to climb again in 2027.

Disney recently attracted attention after deciding that it will no longer provide health coverage to working spouses who have access to insurance through their own employers as of next year. A Disney spokesperson attributed the adjustment to "rising health care costs nationwide."

Starbucks, meanwhile, is ending coverage of GLP-1 medications when they are prescribed for weight loss beginning next month. Deloitte is also reducing certain parental leave and IVF funding benefits for some employees.

"We see employers changing what's offered in the benefit in addition to some employers cutting benefits because they don't feel like they have a choice," Dan Mendelson, CEO of Morgan Health, JPMorgan Chase's employer health division, told Axios.

The pressure is unlikely to disappear anytime soon. Mercer's annual survey of employer-sponsored health plans projects that the total cost of health benefits per employee will increase an average of 8.2% in 2027, the biggest increase since 2003. Even more striking, that estimate already accounts for measures employers expect to take to control spending.

Other forecasts paint a similarly difficult picture. Aon projects employer health costs will increase 9.5% next year to more than $19,000 per employee, while the Business Group on Health expects a median 9.2% increase before employers make changes intended to offset the jump.

For workers, those increases could translate into higher premium contributions or changes in plan design that leave employees responsible for a greater portion of their medical expenses.

But employers are not simply passing along higher bills. Some are experimenting with more aggressive ways of attacking the costs themselves, including contracting directly with health care providers, narrowing hospital networks, changing vendors and steering employees toward providers considered to offer better value. Companies are also investing more in primary care.

"Employers have already absorbed totally outrageous cost increases," Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, told Axios. Mitchell said she was not aware of PBGH members planning to cut benefits outright. Instead, companies are becoming increasingly willing to leave health plans, providers and vendors they believe are failing to control costs.

Few benefits illustrate the dilemma better than GLP-1 drugs, the increasingly popular class of medications used for diabetes and obesity. The Business Group on Health found that 72% of employers provided GLP-1 coverage for obesity in 2025.

That figure fell to 60% in 2026, showing how quickly companies are reconsidering coverage as utilization and spending increase. Rising GLP-1 costs are among several factors employers cite for unexpectedly high health spending.

Large companies are not the only businesses confronting the problem. Smaller employers have been dropping health coverage as costs become increasingly difficult to afford, while interest is growing in alternatives to conventional employer-sponsored insurance.