Employers are revisiting cost-management strategies as they face a third consecutive year of elevated cost growth in 2026.
Health benefit costs rose by 4.5% in 2024, with an increase of 5.8% expected for this year, according to a Mercer survey of more than 700 organizations. “For 2026, employers are addressing faster health cost growth while staying focused on affordability and inclusivity,” the survey report said.
Although inflationary pressures have played a role in current health care cost growth, inflation has cooled, suggesting that other factors are compounding the problem for health plan sponsors. One source of pricing pressure is the widening gap between the supply of health care workers and the demand for services, which is building as older Americans become a larger part of the population. The continuing consolidation of health systems, which shows no sign of slowing, is another factor.
The survey revealed three general employer trends:
- Disrupting cost growth with bolder strategies. Expecting another year of higher cost growth, employers are doubling down on cost management. Although some will use traditional cost-shifting, others are choosing alternative medical plans that steer employees to higher-value providers.
- Considering all dimensions of affordability. Affordability concerns are shaping health benefit cost-management strategies as employers seek to ensure benefits’ long-term value creation
- Building workforce resilience with inclusive benefits. Employers are seeking to support varied workforce needs with inclusive benefits that have meaningful impact. A new focus area is preparing for the effects of climate extremes on workforce health.
Employers have taken a number of actions designed to boost health care affordability, including lowering the cost of coverage to help employees keep more of their paychecks. Twelve percent of employers offer free employee-only coverage in at least one medical plan. Another way to address affordability is to ease financial barriers to seeking care. High deductibles can be hard for those with little savings or chronic health conditions, and nearly two-fifths of employers offer a plan with little cost sharing when care is needed, such as a copay-based plan.
Still another approach is to make a high-deductible plan more manageable by providing larger HSA contributions to low earners. A small number of employers offer interest-free or low-interest loans for medical expenses. Nearly 1 in 10 employers offers telemedicine services to workers who are not eligible for the medical plan (typically part-time employees) as a way to assist low earners with affordable access to care.
Given the current economic realities, slightly more than half of employers say they will ask workers to pick up more of the cost in 2026.
“The tight labor market and concerns about health care affordability have made employers reluctant to use cost shifting to employees as a tactic to slow health care cost growth,” the report said. “But given the ongoing acceleration in cost trend, more employers are seriously considering plan design changes that would shift more cost to employees, such as raising deductibles or out-of-pocket maximums, than considered it last year.”
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