Corporate all-hands meetings will probably have a slide about employer health insurance this year, because health insurance costs are going to be a hot topic. Get ready, because employers—and employees—will have to figure out how to cover a cost spike.
Employer coverage is expected to increase an average of 9.2% to 9.5% in 2026, the biggest increase in 15 years, according to the Wall Street Journal.
It’s the fourth consecutive year of significant increases, putting more strain on employers. The rising costs are attributable to lingering inflation, as hospitals ask for higher prices, the popularity of expensive GLP-1s, and the need for more healthcare services, as rates of cancer, cardiovascular problems, and musculo-skeletal issues climb among working age people, according to the Journal.
Aging workers are also staying in jobs longer and accessing more telemedicine, which is all adding to ballooning medical care costs, the New York Times reported. And of course we can’t forget tariffs, which are affecting prices of medical devices, supplies, and drugs.
“This is the worst I’ve seen,” Pam Kehaly, CEO of Blue Cross Blue Shield of Arizona, told The Wall Street Journal about the rising healthcare costs.
Employers are looking at alternatives to cut costs and avoid pushing rate hikes onto employees. A WTW survey provided to the Wall Street Journal found that 60% of large employers were considering switching health insurers, and a third were thinking of finagling new plans with limited access to providers to cut down costs.
But some will still choose to push the costs onto employees “through larger payroll deductions for premiums or higher out-of-pocket charges such as deductibles,” per the WSJ.
Those all-hands are going to be a lot of fun, for sure.
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