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

Employers are bracing for a significant hike in health care costs next year, with a median increase of 9 percent expected. This trend is largely driven by the rising use of GLP-1 drugs for obesity and diabetes, as well as the increasing prevalence and cost of cancer treatments. The survey, which included 121 employers covering 11. 6 million people, highlights the growing financial burden on companies. To manage these rising costs, employers are likely to scrutinize their health insurance carriers more closely and explore alternative cost-management strategies. This could mean higher insurance premiums and deductibles for workers, although employers are trying to shield employees from the full impact. Ellen Kelsay, CEO of the Business Group on Health, emphasized that passing costs onto employees is only a temporary fix and does not address the underlying issues. The survey reveals that 80 percent of respondents have seen an increase in the use of GLP-1 drugs, with another 15 percent anticipating future increases. To mitigate these expenses, employers are considering stricter coverage policies and utilization management tactics, such as requiring prior authorization and 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. In response, many employers are steering workers toward centers of excellence that offer quality services at lower costs. Other conditions, such as diabetes and musculoskeletal issues, have seen a slight decrease in their impact on overall costs. Mental health and substance use disorder treatments are also on the rise, with almost three-quarters of employers reporting higher utilization rates. Additionally, there is a growing focus on women's health, with more employers expanding preventive care and support services for menopause, postpartum depression, and high-risk pregnancies. Robert Andrews, CEO of the Health Transformation Alliance, suggests that companies should carefully review their agreements with carriers and audit claims to ensure they are getting the best deal. He also recommends capping out-of-network charges and ensuring that insurers enforce these caps. Delta Airlines, one of the Business Group on Health’s members, has successfully kept health insurance costs down by collecting and analyzing data from its employees. By identifying areas of high cost, such as late-stage cancer diagnoses, Delta has implemented programs to encourage early screenings and preventive care. This proactive approach has helped the company maintain low single-digit cost increases.