Rising Healthcare Costs: Strategies for Employers in 2026

As employers look toward 2026, they face mounting challenges with rising healthcare costs. According to the "Employer Health and Benefits Strategy Survey – 2026 Edition" by Brown & Brown, controlling expenses remains a primary concern for organizations. Employers are preparing for an anticipated average cost increase of 10% for health plans, even after making adjustments to plan design. Without these changes, the increase could reach as high as 12%. Businesses are exploring several strategies to manage these costs, including revisiting plan structures once set aside. This might involve narrowing provider networks, increasing employee out-of-pocket costs, and removing certain coverages. Key contributors to rising expenses include economic factors, prescription drug costs, and behavioral health trends. Post-pandemic economic conditions, such as inflation and labor market changes, have intensified pressure on healthcare providers. The financial strain has led to significant reimbursement demands, affecting negotiations with insurance carriers. Reduced Medicaid funding in rural areas exacerbates this situation, often resulting in service reductions or closures, while increased provider consolidation enhances market leverage, leading to higher reimbursements. Prescription expenses, particularly for GLP-1 drugs used for weight loss, have become a focal point. The use of these drugs surged in 2025, consuming a substantial portion of prescription budgets. In response, some insurers and employers are excluding these medications from plans, while manufacturers offer alternative pricing to mitigate costs. Behavioral health expenses have also risen as claims increased significantly in 2025. Although these claims represent a smaller share of total spending, they often accompany costly health conditions like chronic pain and cardiovascular diseases. Expanding provider networks to improve access is expected to further raise costs. A rise in large claimants is due to higher incidences of chronic conditions, costly treatments, and technological advances. Chronic diseases, accounting for a large portion of healthcare expenses, continue to drive costs throughout the system. The No Surprises Act, designed to protect patients from unexpected charges, has led to increased administrative burdens and plan costs due to its dispute resolution process. The heightened number of arbitration cases, driven by specific provider groups, resulted in payouts surpassing standard rates. Hospitals are enhancing revenue cycle management to maximize returns amidst financial strains. New technologies and companies specializing in this area offer promise for more efficient billing but are likely to increase costs for payers. Innovative treatments, such as gene and cellular therapies, present both hope and financial challenges. Despite their rarity, the expense per treatment is substantial, complicating budget forecasts for many employers. Employers need to be proactive in navigating these developments. By collaborating with insurers and consultants, organizations can develop strategies to effectively manage these pressures. Employers are encouraged to seek detailed, timely data to better anticipate emerging cost drivers and adjust their plans accordingly. Managing expenses remains crucial as companies strive to balance economic demands with affordable healthcare offerings.