As we look ahead to 2026, one thing is clear: health care costs are continuing to rise at a significant pace, and employers across the country are feeling the impact.
Projections suggest that employers could see healthcare costs increase by nearly 9%, marking one of the steepest year-over-year increases in more than a decade. For employers already navigating tight budgets and evolving workforce needs, this trend reinforces the importance of strategic benefits planning and cost management.
What’s Driving the Cost Increases?
Several key trends are consistently pushing health care spending higher:
- Rising demand for high-cost medications, particularly GLP-1 drugs like Wegovy and Zepbound, is used for weight loss and diabetes management.
- Increased use of expensive specialty treatments across a broad spectrum of health conditions.
- A surge in mental health needs has led to greater utilization of behavioral health services.
- Ongoing supply chain challenges, patent protections, and limited competition have driven drug prices up more than 5.5 times since 1985, outpacing inflation by a factor of three.
These factors are creating real pressure on employer-sponsored plans, not just in terms of direct claims costs, but also in how they affect plan design, pharmacy benefits, and overall affordability for both employers and employees.
How Employers Are Responding
To address rising costs, employers are considering several strategies:
- Evaluating coverage limits for high-cost drugs and therapies while balancing access and outcomes.
- Investing in preventive care and early intervention to reduce long-term costs, especially in areas like cancer screenings and mental health support.
- In some cases, exploring defined contribution models, such as offering a stipend or allowance for employees to purchase individual health coverage.
- Read our ICHRA Blog Post
While not all approaches will be right for every employer, it’s important to understand the tools available and align them with your workforce strategy.
A Shift Toward Preventive and Value-Based Care
There is a growing trend among employers to expand coverage for preventive care, recognizing the long-term value of early detection and chronic condition management. For example, more employers are now covering comprehensive breast cancer screenings, including follow-up imaging, as preventive services, helping reduce barriers to care and improve health outcomes.
Planning Ahead: What This Means for Employers
Rising costs are not a short-term issue; they’re part of a broader shift in the health care landscape. As a benefits consultant, we’re here to help any employer who is looking to:
- Understand where your health plan dollars are going
- Identify key cost drivers in your population
- Explore cost containment strategies that don’t compromise care quality
- Stay ahead of benefit trends to support recruitment, retention, and employee well-being
Health care is becoming more expensive, but with the right strategy, you can manage costs while still delivering a strong, competitive benefits offering.