What's Happening?
The Business Group on Health has released its annual survey, revealing that employers are preparing for a median healthcare cost increase of 9% in 2026. This follows two years of cost increases that exceeded expectations. The report highlights several factors contributing to this trend, including the rising demand for GLP-1 medications for weight loss, which 79% of surveyed employers have noted. Additionally, cancer remains the leading driver of healthcare costs, exacerbated by increased diagnoses and treatment expenses. Mental health services are also growing as a cost factor, with 73% of employers reporting increased demand for mental health and substance abuse disorder services. Employers are considering various strategies to manage these costs, such as implementing utilization management protocols and exploring alternative pharmacy benefit managers (PBMs) and health plan models.
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Why It's Important?
The anticipated rise in healthcare costs poses significant challenges for employers, potentially impacting the benefits offered to employees. As healthcare expenses continue to climb, employers may need to reassess their healthcare strategies, which could lead to changes in coverage and benefits. This situation underscores the need for innovative solutions and collaboration among industry stakeholders to address the financial pressures. The focus on alternative health plans and transparent PBMs suggests a shift towards more cost-effective and high-quality healthcare options. These changes could affect employees' access to healthcare services and the overall quality of care provided.
What's Next?
Employers are likely to implement changes in their healthcare strategies to mitigate the impact of rising costs. This may include revising vendor lineups, adjusting program configurations, and exploring new health plan models. The Business Group on Health indicates that nearly a quarter of employers will offer alternative health plans in 2026, with more considering this option in the future. Additionally, transparent PBM services are expected to become more prevalent, with 27% of employers planning to offer them in 2026. These developments aim to enhance the affordability and quality of healthcare plans for employees.
Beyond the Headlines
The increasing healthcare costs highlight broader issues within the U.S. healthcare system, including the need for more efficient and transparent healthcare delivery models. Employers' focus on alternative health plans and PBMs reflects a growing demand for solutions that prioritize value and accessibility. This trend may drive long-term changes in how healthcare services are structured and delivered, potentially influencing policy decisions and industry standards.
