Another employee benefits consultant chips in two cents on 2026 benefit costs. According to the results of a Brown & Brown survey, employers say that cost containment is their top priority for the upcoming year. No duh!! They remain dedicated, however, to employee well-being. Really? Supposedly employers are looking at plan design, stop-loss insurance design, more audits, digital health (which has pretty much been debunked as doing anything meaningful for either costs or quality) and different pharmacy benefit management strategies. (B&B Survey)
Employers know that health benefits are a very important part of the overall compensation package for employees and so they are reluctant to make them too expensive or sparse, but if the hiring market is truly quite loose, with many employers saying they have no plans to hire for 2026, then those employers may feel emboldened to tighten up on health benefits as well. Health insurance costs are a very substantial pain point for employers and workers as we head in 2026 and no one seems willing to take the steps that would be required to really help control expenses.
Then another benefits consulting firm, Lockton, issued a report about high cost claims. According to this analysis, around 1% of employees annually have a claim for $100,000 or more, but those claims account for 33% of all spending. Lockton says these claims are getting more complex and expensive, and most importantly for premium-setting purposes, less predictable. The number of million-dollar plus claims has grown by 45% from 2022 to 2024. Only 21% of persons with a high cost claim in one year persist at that level the next year. Some of these people die, some retire. And many have a disease that comes under control.
The top ten people in the analysis each had claims over $4 million, with the very top being $9.75 million. Cancer is the number one disease condition among high-cost claims, followed by circulatory disorders and musculoskeletal conditions. Mental health is increasing as one of the conditions suffered by these persons, which may be partly affected by having a serious disease. Pharmacy claims account for about one fourth of the total in a typical high cost claim. Many have specialty drugs that must be infused, and shockingly to me, the single most common source for those infusions is hospital outpatient departments, which are far more expensive than other sites. Employers who want to control costs should insist on a different site of service. (Lockton Report)
