Health

Axios - Big employers who've tried to insulate workers from rising health costs are changing their thinking as they face another year of steep increases in 2026.

The added costs in the form of higher premiums will hit workers already reeling from inflationary pressures. But corporations appear unwilling to eat a third year of higher-than-expected benefit costs. "The story this year is perhaps more daunting and sobering than it ever has been," Ellen Kelsay, CEO of Business Group on Health, said yesterday.

A survey the group released of 121 large employers insuring 11.6 million people found companies' medical costs sharply outpaced their expectations over the past two years.

• They are now projecting health costs to jump a median of 9% next year absent any cutbacks in benefits to offset the increases.
• Other surveys have projected median increases from 5.8% to 10%.

The cost pressures in some ways mirror the experience in Affordable Care Act and other insurance markets that have seen higher demand for health procedures and tests and rising drug costs.

• Cancer is the top driver of employer health costs for the fourth year in a row, as diagnoses increase and treatment costs grow, according to the Business Group on Health survey.
• Employers have also expressed concerns about pricey biologic drugs, anti-inflammatory specialty drugs and the soaring demand for GLP-1s for obesity.
• In 2024, pharmacy expenses accounted for nearly a quarter of all employers' health care spending (24%), and the companies project an increase of 11% to 12% next year, per the Business Group on Health.

Nearly one quarter of large employers will have alternative health plan arrangements in place next year, and another 36% are considering them for the future, the survey found.

• Your employer might even introduce what they call a "high performance network" or "exclusive provider organization" this year. Share this