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.