Health Costs on the Rise: Employers Face Tough Choices in 2026

Median Increase of 9 Percent Expected

Employers are preparing for a substantial rise in health care costs next year, with a median increase of 9 percent anticipated. This trend is primarily driven by the growing use of GLP-1 drugs for obesity and diabetes, as well as the increasing prevalence and cost of cancer treatments. A survey, including 121 employers covering 11.6 million people, underscores the escalating financial burden on companies.

Strategies to Manage Rising Costs

To mitigate these expenses, employers are likely to:

• Scrutinize health insurance carriers more closely
• Explore alternative cost-management strategies

This could result in higher insurance premiums and deductibles for workers, although employers aim to shield employees from the full impact.

"Passing costs onto employees is only a temporary fix and does not address the underlying issues." Ellen Kelsay, CEO of the Business Group on Health

GLP-1 Drugs and Cancer: Key Cost Drivers

• 80 percent of respondents have seen an increase in the use of GLP-1 drugs, with another 15 percent anticipating future increases.
• Employers are considering stricter coverage policies and utilization management tactics, such as:
• Requiring prior authorization

• Participation in weight management programs

• Cancer remains the top condition driving health care costs, with nearly 90 percent of employers identifying it as one of the top three cost drivers.
• Employers are steering workers toward centers of excellence that offer quality services at lower costs.

Other Notable Trends

• Mental health and substance use disorder treatments are on the rise, with almost three-quarters of employers reporting higher utilization rates.
• There is a growing focus on women's health, with more employers expanding preventive care and support services for:
• Menopause
• Postpartum depression
• High-risk pregnancies

Expert Recommendations

Robert Andrews, CEO of the Health Transformation Alliance, suggests that companies should:

• Carefully review their agreements with carriers
• Audit claims to ensure they are getting the best deal
• Cap out-of-network charges
• Ensure that insurers enforce these caps

Success Story: Delta Airlines

Delta Airlines, a member of the Business Group on Health, has successfully kept health insurance costs down by:

• Collecting and analyzing data from its employees
• Identifying areas of high cost, such as late-stage cancer diagnoses
• Implementing programs to encourage early screenings and preventive care

This proactive approach has helped the company maintain low single-digit cost increases.