Why employers forecast 10% increase in health care costs in 2026
U.S. employers expect median health care costs to grow by 10% in 2026, according to a new survey of the U.S. International Employee Benefits Program.
The International Foundation of Employee Welfare Program is a nonprofit organization dedicated to providing educational information to those working in the employee welfare industry. It has more than 31,000 employer members representing the lives of more than 25 million people.
The organization's investigation, released Thursday, was conducted between July 30 and August 7, and included responses from 150 companies and single employers. The 10% increase in health care costs is expected to increase significantly from a median forecast of a similar report last year, which is expected to increase median in 2025.
When asked about the main factor that led to the increase in healthcare program costs was that in 2026, 31% said “disastrous claims”, an increase from 20% last year. After the catastrophic claim, 23% said professional/expensive prescription medications, 15% said utilization due to chronic illness, and 11% for healthcare providers.
Among those who choose professional/expensive prescription drugs as the main factor in cost increase, 59% say GLP-1 drugs are the main cause (this is 75% say GLP-1 is the cause). After GLP-1S, 50% said cancer drugs, 21% said cell and gene therapy, and 26% said other drugs.
To combat these growing costs in 2026, 27% of respondents said that implementing cost-sharing programs (such as through deductibles, coinsurance, copayment or premium contributions) would be the biggest impact. That's 21% said, last year. Furthermore, this is consistent with what Mercer found in a recent survey, where 51% of the big employers said they are likely or likely to transfer costs to employees in 2026.
About 17% of respondents in the International Foundation survey said that the implementation plan design plan will also be effective. This includes dependency reviews, high trip health plans, spousal surcharges and format changes.
Another 17% said they would use procurement/provider programs such as telehealth, price transparency tools, centers of excellence, health care navigators and quality programs.
Finally, 12% of respondents reported that they would implement utilizing control programs such as prior authorization, case management, disease management and nurse advice lines. However, this has dropped significantly compared to last year, when 27% said they would use the Utilization Control Program.
“The expected increase is attributed to various factors that affect the cost of the organization’s healthcare program, disastrous claims and professional/expensive prescription drugs all top the list,” Julie Stich, vice president of content for employee benefits programs, said in a statement. “Employers say that cost distribution, planning design and purchase/provider planning will be the most influential technology to manage costs.”
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