Health plan sponsors, already dealing with steadily rising costs, now face the highest increase in 15 years as they look ahead to 2026.
The total health benefit cost per employee is expected to rise an average of 6.5% next year, even after accounting for planned cost-reduction measures. Employers estimated that plan cost would increase by nearly 9% on average if they took no action to lower cost, according to Mercer’s 2025 National Survey of Employer-Sponsored Health Plans.
“Based on the projections, 2026 will be the fourth consecutive year of elevated health benefit cost growth following a decade of moderate annual increases averaging only about 3%,” the survey report said. “With pressure mounting on their health care budgets, the 2026 cost spike has been a call to action for many employers.”
The health benefit cost trend has two primary components -- the price of health care services and the rate of utilization -- and right now, both are rising:
- Advances in diagnostics and therapeutics, such as cancer treatments and weight-loss drugs, produce better outcomes. However, they typically cost more than the treatments they replace. In addition, the continuing consolidation of providers into fewer, larger health systems has improved their ability to work with insurers in setting reimbursement levels.
- Utilization rates for various health services have been rising over the past two years. The lingering effect of delayed or missed care because of the COVID-19 pandemic likely is a factor.
As a result, nearly 6 in 10 employers will make cost-cutting changes to their plans in 2026, up from 48% in 2025 and 44% in 2024. Generally, these changes involve raising deductibles and other cost-sharing provisions, which can lead to higher out-of-pocket costs for plan members when they seek care.
However, many employers also will pursue strategies to slow cost growth without shifting cost to employees. Their top priority is addressing high-cost claims through enhanced case management and other means without affecting health care affordability. The second priority is a stronger focus on ensuring that programs designed to support members with chronic conditions and other health needs deliver meaningful results, followed by making behavioral health care more accessible.
“This might be a good year to really help employees to understand the value of the lower-cost options,” the report said. “If, like most employers, you offer more than one medical plan option, you may want to reinforce the need for employees carefully weigh the trade-offs between premium cost and cost-sharing provisions to determine which plan is best for them.”
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