One of the most interesting set of participants in the health industry is the health benefits consultants. These often very large firms help employers make decisions about benefits, premiums and vendors. They do a variety of data and analytic services. They must be doing a bad job because they haven’t done much to keep costs down over the last decade and certainly the last couple of years, but they are a comfort blanket for big company HR departments. Most of the large ones put out an annual report on the current year’s health insurance increases with a projection for the next year and identification of particular cost hot spots.
Mercer just released its report. According to the firm, employers are spending $17496 per employee for health care in 2025, a 6% increase over the prior year. Prescription drugs are up 9.4%, continuing to be a major contributor to overall cost increases. The firm further expects costs to rise to around $18,500 per employee in 2026, a 6.7% increase. Employers are offering workers a choice of plans that vary in monthly contributions and deductibles and copays. But there is little companies can do to truly lower costs. Especially hard hit are low-income workers.
Employers have implemented a variety of care management programs in areas such as diabetes, mental health, high blood pressure, but are unsure they are actually getting a payback from these programs and intend to examine whether they are worth keeping. Other employer priorities are managing high-cost claims, steering workers to high performance providers (whatever that means), aiding employees with “financial wellness”, and finding alternatives to traditional pharmacy benefit managers.
The continued rise in health plan premium costs is driven by excessive health care costs, of which the major components are drug prices and hospital prices. Until those are addressed, a lot of health care cost pain is in store for employers and consumers.
