Cost management and affordability become top priorities as employers brace for another year of significant healthcare cost increases in 2026. Using accurate trend projections from market experts, employers can more effectively plan for renewal season and forecast a budget for next year. The following sources explain key observations from some of the current studies, surveys, and reports that project a rise in medical cost trends throughout 2026.
- The growing prevalence of cancer diagnoses and the escalating cost of treatment
- General rising pharmacy costs, especially the high cost and usage of glucagon-like peptide 1 (or GLP-1) agonists for weight loss
- Increasing incidences of chronic and complex conditions
- Uptick in mental health services as employers expand access and reduce stigma
Aon (a global professional services firm) projects a 9.5% increase in 2026, meaning employers can expect to pay an average of $17,000 per employee for health care costs next year. This marks the third consecutive year with price hikes approaching double digits.
Aon’s report identified the following inflators that are fueling higher prices:
- Continued rise in chronic and high-cost conditions (such as musculoskeletal disease, cardiovascular disease, and cancer) remain primary drivers of escalating U.S. medical costs.
- Hospital workforce expansion is contributing to higher levels of health care use.
- Prescription drug spending (notably GLP-1 therapies) is rising, driven by greater use of costly brand-name and specialty medications.
Despite medical inflation, employers are turning to the following strategies to mitigate the rising expenditures:
- Benefit design changes
- Employee payroll contribution increases
- Partnerships with point solution vendors
- Targeted chronic condition management
- Data-based solutions
See Aon’s full analysis: U.S. Employer Health Care Costs Expected to Rise 9.5 Percent in 2026
See further analysis from Aon: Global health plan costs projected to rise nearly 10% in 2026
SOURCE: Employer health costs to top $17,000 per employee in 2026
- Hospital costs are elevated across the board, from health care workers’ wages to supplies. General operating costs are also up, and those are often passed along. To cope, hospitals are using revenue cycle management, which can lead to increased inpatient admissions and a cost shift to commercial payers.
- New therapeutics, including glucagon-like peptide-1 (GLP-1) agonists, continue to hit the market for both prevalent chronic illnesses and rare genetic disorders. Drug spending is being driven by oncology, immunology, cardiovascular, obesity and diabetes. Related to spend, the report also noted that GLP-1s could have additional conditions approved for off-label use in the coming years.
- Behavioral health care spending is also rising, with inpatient claims up nearly 80% and outpatient claims up almost 40%. One in 3 health plan actuaries named behavioral health a top inflator, as they expect a 10%-20% trend for 2026.
- Biosimilars were noted as health plans’ top cost deflator for the third year in a row. Biosimilar adoption increased significantly in 2024, and it’s expected to continue with newly approved biosimilars.
- Cost of care management is proving successful for health plans. Plans are exploring utilization management, claims integrity reviews, pharmacy overview and prescription management programs. Artificial intelligence is being used in these processes and could further drive its deflationary impact.
In addition to inflators and deflators, the PwC report also noted that federal policy shifts, especially the One Big Beautiful Bill (OBBB) Act, could add to cost pressures in 2026. OBBB’s implications include Medicaid eligibility, lapsing ACA subsidies and proposed tariffs on pharmaceutical imports.
Read PwC’s complete report: Behind the Numbers 2026
Employers expect median health care costs to rise 9% in 2026 (the largest increase in over a decade), according to new data from Business Group on Health’s 2026 Employer Health Care Strategy Survey.
Business Group surveyed large U.S. employers, receiving 121 responses from employers that provide health coverage for about 7.4 million people in the United States. Employer survey responses identified the following inflators as the biggest cost drivers:
Obesity medications come at a high price, and employers report higher plan participant demand for GLP-1 agonists (like Wegovy and Zepbound) and other expensive weight-loss treatments.
Cancer remains the single largest driver of healthcare costs.
Chronic conditions (such as musculoskeletal conditions, cardiovascular disease, diabetes, autoimmune disorders, and obesity) are adding further strain with increased use of high-cost treatments.
Mental health and substance use services are also rising sharply in utilization because of the rising prevalence of mental health conditions.
- Pharmaceutical costs (which account for nearly a quarter of healthcare spending) are anticipated to increase 11-12%.
Despite these cost drivers, the following strategies were outlined for employer cost management and affordability:
- Strict GLP-1 requirements are being implemented by organizations (such as prior authorization and mandatory participation in weight management programs) to limit or reduce coverage for GLP-1 agonists and related medications.
- Preventive care strategies are being used more by employers (particularly in cancer), including expanded coverage for screenings, alternative offerings for invasive tests, removed age restrictions, and even incentives for employees to complete recommended preventive care (i.e. primary care, breast cancer screenings, and immunizations).
- High quality and cost effective care for employees has become the new key focus for employers. To reduce inappropriate and unnecessary care, employers are urging their workforces to use health plan resources and navigation tools to find high-value care.
- Vendor accountability for quality and value over volume is being demanded by employers, which includes harder bargaining with vendors to keep health costs flat. Employers are calling for improvements in high-quality provider navigation, increased cost and quality transparency, stronger coordination of integrated care teams, and alternative PBM models that reduce reliance on rebates.
See Business Group’s complete survey: 2026 Employer Health Care Strategy Survey
SOURCES:
According to HUB International’s 2026 Trend Study, health care costs will continue to rise throughout 2026. Key findings from the study reveal that 2026 trends are projected at 8-10% for combined Medical (Med) and Pharmacy (Rx) coverage, driven primarily by pharmacy costs and significant regional variations.
HUB International studied the medical and pharmacy trends of carrier partners from four regions in the United States: east, pacific, south, and central. The highest and most notable trends in 2025-2026 data include:
- East Region: 10.04% for combined Med/Rx coverage
- Pacific Region: 11.05% Indemnity Plans and 11.08% Rx
- National: 11.26% Rx and 10-12% Specialist Pharmaceuticals
HUB International’s report outlined the following factors that are contributing to increasing trend:
- Increased Utilization
- High Cost Prescription Drugs
- Price Inflation
- Regulatory & Legislative Impacts
- Deteriorating Population Health
- Increased Severity of Facility Claims
Despite these inflators, carrier partners also identified the following factors that contribute to offsetting trend increases:
- Site-of-Care Optimization
- Biosimilars Adoption
- GLP-1 Drug Management (including step therapy and restrictive coverage criteria)
- Medical & Risk Management
- Overall Trend Stabilization
See HUB International’s complete study: 2026 Trend Study
SOURCE: Pharmacy costs drive health care trend to nearly 10%
