Healthcare Costs on the Rise
Recent analysis from Mercer, a consulting firm, indicates that health care benefit expenses are projected to climb by 6.7% in 2026, with the average cost per employee likely surpassing $18,500.
This figure slightly exceeds Mercer’s earlier prediction from last fall, which estimated a 6.5% increase in total health benefit costs this year, cautioning that such hikes were approaching a 15-year peak. In 2025, medical benefit costs rose by 6%.
These latest statistics affirm what many employers have already sensed—the continuing surge in medical expenses is straining benefit budgets.
John Turnett, who leads Gallagher’s Benefits and Human Resources Consulting practice in Charlotte, labeled the escalating health care costs as “unsustainable.” He pointed out that relying on outdated methods, like annual hikes in both employee premiums and deductibles, is also no longer a feasible approach.
Consequently, shifting more costs onto employees remains the main tactic employers are utilizing or planning to adopt. According to Mercer, 66% of employers with 500 or more employees are likely or very likely to increase premiums next year. Additionally, around half of these employers indicated they might raise the cost burden in other ways, such as elevating deductibles or increasing out-of-pocket limits.
However, there’s a noticeable trend among employers who are exploring other methods to mitigate costs so that employees aren’t left to shoulder the entire burden.
“Employers face significant pressure to tackle the persistent rise in health benefit expenses, yet they recognize that affordability remains crucial for employees,” remarked Simon Camadzi, Mercer’s U.S. health leader.
New Cost Management Strategies
According to Mercer, employers are increasingly exploring innovative strategies for managing expenses alongside traditional cost-sharing methods.
Kamadzi highlighted that employers are adopting various tools to handle costs, which include both traditional cost-sharing approaches and new strategies that direct employees toward higher-value care while providing support aimed at maximizing impact.
Close to one-third (31%) of large employers currently either offer or plan to offer at least one nontraditional health plan, like a high-performance network or a variable copay plan, by 2027. An additional 38% are considering such options, as these plans often provide lower costs to members who utilize specific, high-performing providers.
Rethinking GLP-1 Coverage
Another strategy employers might employ is to reconsider GLP-1 coverage, particularly when prescribed for weight loss.
As per the Mercer survey, 6% of large employers plan to entirely remove coverage for GLP-1 drugs in 2026, and another 5% are contemplating doing the same next year. Additionally, nearly 30% of large employers have made strides in managing GLP-1 usage more effectively to control expenses.
Given the high costs and substantial demand for GLP-1 medications, experts suggest it’s understandable that employers are reassessing whether these drugs provide value that justifies the expense.
According to SHRM’s recently released 2026 Employee Benefits Survey, a growing number of employers are revisiting changes to pharmacy benefits as costs for prescription drugs—including GLP-1—continue to rise.
Research shows a decline in the percentage of employers bundling prescription drug coverage with health insurance, dropping from 93% in 2025 to 77% in 2026. Meanwhile, the number using independent pharmacy management programs has jumped from 18% to 23% year-over-year.
This trend indicates that employers are becoming increasingly prudent about managing prescription drug costs. Fewer employers are providing drug coverage as a straightforward component of health plans, yet more are integrating pharmacy management strategies to have better oversight over the availability, expense, and access to costly medications like GLP-1 and specialty drugs.
