U.S. employers project their health care costs will leap by 8% in 2026, even after accounting for new changes in plan design intended to keep costs in check.
The anticipated increase will push the cost of health care in the United States to its highest point in more than two decades, according to advisory firm Willis Towers Watson, which surveyed 427 employers in June and July.
Without making changes to plan design, costs would rise 9.1% next year, WTW reported.
Survey results revealed the top drivers of healthcare costs to be (1) pharmacy costs, primarily specialty pharmaceuticals and GLP-1 weight-loss medications; (2) high-cost claimants; and (3) chronic conditions, especially musculoskeletal conditions and cancers.
With the sharp rise in health care costs, employers are absorbing less of them. At the same time, though, they’re avoiding aggressive cost-shifting out of concern for employees’ health, satisfaction and retention, noted Tim Stawicki, WTW’s chief actuary for health and benefits.
A majority (59%) of those polled said their companies intend to implement cost-saving actions beyond shifting costs to employees over the next three years.
“Instead,” Stawicki said, “Employers are looking to bold disruptive changes that control costs and improve health to create a more sustainable path forward.”
Employers are prioritizing changes to program subsidies, improving vendor or operational efficiency, and more effective steerage or behavioral requirements. Almost half (46%) of survey participants are evaluating vendor performance, and more than a third (36%) have taken their medical plans out to bid.
Additionally, 33% of companies have conducted medical claims audits, and 22% have conducted reviews of prior authorizations or evaluated qualifying payments for out-of-network services.
Another increasingly popular approach to addressing health care costs is implementing plan-design alternatives that don’t involve cost shifting. Currently used by 41% of survey participants’ employers, such plans focus on alternative or select providers, price or cost transparency, expanded use of member-facing technology and advanced or high-performance primary care.
An additional 46% of companies are planning or considering such changes in the next two years.
Companies are also looking into the mushrooming popularity of costly GLP-1 drugs. Coverage is currently offered by 57% of employers, but 15% are either considering its removal or have done so in the past year.
And, of course, AI usage is popping up seemingly everywhere, and employer-provided health care is no exception.
Already, 21% of those surveyed said their companies are using AI moderately or extensively in this area. More broadly, 80% said they believe it will fundamentally change the way health care benefits are managed, communicated and delivered in the next three years.
