Employer-sponsored health plans to see 7% jump in premiums, survey finds
Businesses are estimating the cost of offering health insurance to staff is set to increase by 6% to 7% next year—possibly as high as 9%, if cost-cutting measures are not implemented. Unfortunately, that means higher premiums for those who rely on employer-sponsored coverage.
According to consulting firm Mercer, this marks the fourth consecutive year of “elevated health benefit cost growth,” whereas the previous decade saw a modest average increase of 3% per year. In a survey of 1,700 U.S. employers, many reported plans to cut back on spending this year to compensate—meaning, overall benefit packages may suffer as a result.
“Health benefit cost trend has two primary components—the price of healthcare services and the rate of utilization—and right now, both are rising,” Mercer wrote in its analysis. It added that while new treatments are producing better outcomes than before, they also come with higher price tags.
In terms of care utilization, Mercer said people are simply using services more often across the board. The COVID-19 pandemic may still be a factor, as many delayed routine visits and elective surgeries. However, telemedicine is also likely contributing to the increase, as technology makes it easier for patients to seek treatment.
“[T]he rise of virtual healthcare—and growing consumer acceptance of it, particularly in behavioral health—is also affecting utilization patterns because it removes geographic barriers to care and can be a more convenient option for patients,” Mercer stated.
Other factors contributing to rising costs include “inflation across the general economy,” such as higher provider wages. Consolidation may also be increasing reimbursement rates, as is the use of AI technology to optimize billing processes.
Mercer added that AI is also improving efficiency at medical practices, allowing them to see more patients, which in turn increases expenses for insurers due to higher utilization.
Premiums will rise
As mentioned above, employers are preparing to implement cost-cutting measures. Respondents told Mercer they plan to do so by better managing high-cost claims and restructuring their health plan offerings. Mercer said this presents an opportunity to introduce lower-cost insurance options.
“If, like most employers, you offer more than one medical plan option, you may want to reinforce the need for employees [to] carefully weigh the trade-offs between premium cost and cost-sharing provisions to determine which plan is best for them,” the consulting group wrote. “This will be especially important if you have made substantial plan design changes or have recently added a non-traditional, high-performance network plan that employees may be less familiar with.”
In total, 59% of employers told Mercer they intend to work proactively to find ways to cut costs. Last year, that number was just 48%, possibly indicating that the anticipated spike in prices in 2026 has prompted benefit managers to take action.
Regardless, Mercer added that Americans can expect higher out-of-pocket expenses—such as co-pays—and possibly larger deductibles, as they inevitably share rising costs with their employers.
The full survey results and report is available here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.