U.S. employers are facing a significant increase in health insurance costs, marking the largest surge in at least 15 years, projected to reach nearly 10% next year.
According to benefits consultants Aon and WTW, the Wall Street Journal reported that costs for health coverage are expected to rise by around 9.5% and 9.2% in 2026, which is the fastest increase since 2011.
The average annual cost for a family plan is now about $25,500, which is not much less than the cost of a small car.
“This is simply not sustainable for many employers,” noted Shawn Gremminger, who leads the National Alliance of Healthcare Purchaser Coalitions. He mentioned that the overall reaction from companies has been a mix of frustration and resignation.
Insurance companies attribute the rising premiums to increased hospital bills, higher utilization of medical services, and the introduction of costly new medications, particularly GLP-1 drugs like Ozempic and Wegovy aimed at weight loss and diabetes management.
There’s also concern over more instances of cancer and chronic illnesses appearing among working-age Americans.
To cope with these escalating costs, some companies are passing on the burden to employees through higher payroll deductions or are looking to redesign their plans to restrict access to certain healthcare providers.
A recent WTW survey indicates that 60% of large employers are considering changing their insurance or pharmacy benefit managers in the near future.
Troy Morris, CEO of Kall Morris Inc., stated that while his company will cover 100% of employee premiums, it has seen a staggering rise of 20% in planned costs for the upcoming year, following a 9% increase in 2024.
The family out-of-pocket maximum expenses climbed from $8,150 to $10,000.
“It’s a tough decision; it honestly makes you feel uneasy,” he remarked.
Omaha Mutual, which covers around 6,300 employees, faced a double-digit cost increase this year and opted to cut coverage for GLP-1 drugs aimed at weight loss.
The insurance company noted that creating a program to manage weight loss maintenance could jeopardize valuable rebates from their pharmacy benefit manager.
“We’re definitely feeling frustrated,” said Stephen Schlange, the vice president of human resources at the company.
Pamke Harry, CEO of Arizona’s Blue Cross Blue Shield, described the situation as “the worst I’ve seen.” She highlighted how aggressive billing practices from some providers have sharply escalated due to advancements in artificial intelligence.
Kirkroy, the chief actuary at Michigan’s Blue Cross Blue Shield, observed that conditions once associated with older individuals, such as atrial fibrillation and joint issues, are now increasingly seen in younger, working-age employees.
“We’re witnessing a rise in ailments that were typically linked to older populations,” he added.
