Healthcare costs rise: What employers are doing to manage expenses, per person
Employers are already rising in health care costs in 2025, and early signs are showing that these challenges will continue to exist – according to Tracy Watts, a senior partner at Mercer, Mercer, who is senior partner at Mercer consulting firm Mercer, the challenges could worsen in 2026.
This is at the point where employers may have to start transferring costs to employees, she added.
“According to our survey data, over the past few years, [employers have] She said I really tried to stop the transfer costs of employees because I think everyone is very sensitive to affordability issues. But I think it will be difficult to enter 2026. So, renew your initial 'what do you think your growth will be? “It will be higher than what employers may see. So it will be very difficult to boil it down to something more on the budget.”
Watts made the comments in an interview in Las Vegas at the 2025 AHIP 2025 conference on Monday.
Mercer has previously reported that employers expect health care costs to increase by 5.8% in 2025 from the previous year. Employers don’t know until the end of the year how much growth is, Watts said, but their forecasts are usually “within a fraction of the percentage point.” She expects to increase in 2026.
She added that GLP-1 is the main factor in these cost increases. Last year, many employers increased GLP-1 coverage, but she hopes some rethink the decision and propose stricter standards within GLP-1 coverage.
To address the cost increase, Watts sees employers adopt several strategies. One is moving towards high-performance networks, a curated network of providers that have been proven to provide quality care.
Variable copayment plans are also gaining some appeal, where copayment depends on certain factors, such as the type of service or the network of providers. Watts illustrates the example of Sirest, a company that provides a tool where members can look for care and view different options for providers. Their joint payments are then based on the choices they make.
“Our survey data with workers says 30% of people are very worried that they can't afford the care they need,” Watts said. “So, having a tool that has access to care, and your choice determines what appeal will be in your pocket.”
Additionally, some employers are implementing exclusive provider organization (EPO) programs, with members only in-network coverage unless in an emergency. This is more expensive than a preferred provider organization (PPO) program where members can get out-of-network coverage, but it is costly.
“It's on a smaller network. You pay less for the program, and when care is needed, you lose your pockets. Even with these incentives, we're seeing … costing less than their PPO program.”
Photo: Lerbank, Getty Images
