California employer health premiums will cost as much as a new car in 2027

Key Points:

• Health insurance premiums for employers in California are expected to rise sharply in 2027, potentially reaching over $30,000 for family coverage, driven by a projected 9% increase in medical service and prescription drug costs—the highest since 2011.
• Rising premiums are reducing workers' take-home pay and wages, forcing small businesses to cut staff hours or shift costs to employees, with some resorting to raising prices or hiring overseas to manage expenses.
• Hospital consolidation by major health systems like UCLA and Cedars-Sinai has reduced competition, allowing these entities to set higher prices, contributing significantly to escalating medical costs.
• Prescription drug costs, especially for cancer treatments and obesity medications like GLP-1 drugs, are surging, with obesity drug spending increasing 81% last year, further inflating overall health care expenses.
• Additional factors increasing premiums include new state taxes on private health plans to fund Medi-Cal and budget needs, with employers responding by increasing deductibles and co-pays, leading to reduced hiring and wage growth.