Employers have faced steep, beyond expectation rises in healthcare costs over the last two years with a further 9% rise predicted for next year.
This will put costs a whopping 62% higher than in 2017, the Business Group on Health’s 2026 Employer Health Care Strategy Survey found.
This is being triggered by increasing use of existing services and the addition of new medications and treatments driving further demand, according to the 121 multinational organisations covering 11.6 million employees who responded.
The Business Group on Health is a network of employers, including 74 Fortune 100 companies, providing health coverage for 60 million workers, retirees and their families in 200 countries and territories.
Costs increasing beyond expectations
According to this year’s findings, employers predict healthcare cost trend increases for 2026 will come in at a median of 9%, offset to 7.6% where plan design changes are made.
The survey showed employers were facing steeper healthcare cost increases, exacerbated by actual healthcare costs greatly exceeding employer forecasts for the second year in a row.
With employers experiencing the highest back-to-back increases in a decade in both 2023 and 2024, beyond forecasted levels, they began 2025 at a major cost disadvantage and both the unit cost and utilisation of healthcare services have surged.
On a compounded basis, costs in 2026 are expected to be 62% higher than 2017 levels.
These predictions coincide with more employees turning to GLP-1 weight loss drugs to tackle obesity, receiving cancer diagnoses and using mental health services, the survey showed.
Coping strategies
In response to these cost concerns, more than four out of 10 employers (41%) are either changing pharmacy benefit managers (PBMs) or conducting a request for proposal (RFP), while 51% are either changing or conducting an RFP for other health and wellbeing vendor relationships.
Almost eight in 10 (79%) of employers have seen an uptick in the use of GLP-1s, while an additional 15% anticipate seeing such an increase in the future.
In 2024, a quarter of all employer healthcare spend (24%) went to pharmacy expenses and employers see no relief on the horizon, with a forecast of an 11% to 12% increase in pharmacy costs heading into 2026.
US hitting global benefits
When quizzed about the impact of United States healthcare costs on global benefits, more than two thirds (67%) of multinational employers said it affected worldwide offerings.
And when asked about controlling healthcare costs outside the US, three-quarters of multinational employers indicated some level of concern, with a third (34%) expressing the strongest levels of concern.
Cancer, musculoskeletal conditions, cardiovascular issues and diabetes were once again identified as the top cost drivers of concern worldwide.
Employers found several approaches as having promise to improve quality of care: navigation to higher-quality providers (selected by 82% of employers), greater transparency of quality data (82%) and coordination of integrated care teams (79%).
Cancer, mental health and menopause
Cancer ranked as the top condition driving employer healthcare costs for a fourth year in a row.
Consequently, employers expect a greater focus on cancer prevention and screening coverage, including alternatives to colonoscopies, expanding coverage of breast cancer screenings and removing age restrictions on preventive care coverage.
Employers also recognised that access to high-value treatments is essential, with about half offering a cancer COE in 2026, and another 23% considering doing so by 2028.
Around three quarters (73%) of employers reported an increase in mental health and substance use disorder services, while another 17% anticipate a future increase.
In 2026, 58% of employers will expand preventive care for women, an increase of 22 percentage points in just two years.
While 58% of employers will provide menopause support programs, an additional 25% of employers said they planned to expand programs for menopause by 2028.
This was up from 28% of employers in 2024 who had programs in place to support employees going through menopause.
Emerging enhancements include employer coverage of doula services (36%), services to treat postpartum depression (55%), initiatives to support high-risk pregnancies in under-resourced populations (43%) and group-based prenatal care (30%).
Forthcoming priorities
Looking ahead, employers said there were several other interrelated priorities for the coming year.
These included affordability for both their businesses and workforces; a greater reliance on utilisation management and weight management programs in concert with GLP-1s to ensure optimal outcomes in obesity treatment; and assessment of mental health access and appropriateness of care.
Tax treatment
The Employee Retirement Income Security Act (ERISA) and the favourable tax treatment of benefit plans continued to remain central to employers’ ability to offer comprehensive, high-quality and affordable coverage.
Almost all employers – 99% – said protecting and affirming ERISA was a key policy imperative.
When asked to rank their top priorities for the US government, 85% of employers responded with protection of tax-free status as one of their top five, followed closely by protection of ERISA pre-emption (81%).
More than six in 10 employers (62%) said they would also prioritise pharmacy supply chain reform.
Need for bold and strategic moves
Ellen Kelsay, president and CEO of Business Group on Health, said: “In this challenging environment, employers remain firmly committed to an ongoing investment in employee health and wellbeing.
“Yet they will need to make bold and strategic moves to contain costs, sometimes disrupting healthcare models along the way.
“For instance, we will see them rigorously evaluating benefit offerings, vendor performance and patient outcomes.
“We will also see more employers exploring non-traditional health plan and pharmacy benefit manager models.
“And as employers urge workforces to use health plan resources and navigation tools to find high-value care, we’ll see more people using primary care and getting recommended screenings and immunisations.”
