Open Enrollment 2026 is complete! Did your Company take steps to escape the High Healthcare Cost Increase?

January 16, 2026

National surveys and benefits analysts showed healthcare cost trends for both employers and their employees for 2026 at their highest levels in over a decade. Projections ranged from about 6.5% to over 9% or more year-over-year increases in these employer health benefit costs. with some employers projecting a 10% rise in healthcare costs for 2026 .

These continued and accelerated healthcare premium costs leave employers with reduced resources to address other budget needs. Once again, company leaders have been forced to consider higher employee contributions, reduced plan options along with higher annual deductibles & copays for healthcare services. These changes often risk hurting recruitment & retention at a time when there continues to be a struggle to fill critical roles in their organizations.

In employer-sponsored plans, data from the 2025 KFF Employer Health Benefits Survey shows that annual family premiums rose 6% in 2025-nearing $27,000 on average-with continued upward pressure expected in 2026. This rise has outpaced typical household expenses & general inflation and reflects steadily growing underlying medical and administrative costs.

An overlooked cause to rising healthcare costs

In most modern businesses, leaders pride themselves on managing costs with surgical precision. They optimize production lines, negotiate supplier contracts, engineer pricing strategies, and squeeze efficiencies from every department. Yet one of the single largest cost categories on the balance sheet – health care spending – frequently remains inadequately controlled, reactive rather than strategic, and disconnected from broader business performance management.

As mentioned above, employer-sponsored health benefits have experienced consistently high cost increases, outpacing general inflation, wage growth, and many other categories that companies monitor intensely. Surveys of even the large employers show projected health care cost trends for 2026 near 9% annually, a level not seen in over a decade, presenting a mounting financial burden.

Yet, despite this, many employers treat health benefits like a necessary obligation that must be paid rather than a strategic investment requiring active management, even while they carve every other expense category to extract value.

Why the employer disconnect exists

There are interrelated structural and behavioral reasons why employers often fail to manage healthcare costs as rigorously as other expenses:

• Complexity & Fragmentation of the current Healthcare System model – Healthcare is arguably the most complex expense category any employer deals with. Unlike a business commodity that can be bought transparently with a systematic process of comparing expenses against potential benefits, revenue, or strategic value before making a decision to invest or purchase, healthcare prices, utilization patterns, insurer contracts, provider networks, and patient behavior all interact in non-transparent ways.  The result is a lack or complete absence of information: insurer and healthcare providers hold most of the price & performance data, while employers see what essentially are “black box” trend results without actionable levers to influence them. This complexity makes healthcare spending hard to diagnose and control, compared to straightforward cost categories like office supplies or logistics.
• Lack of Internal Capability & Data Discipline – Most business have dedicated teams for finance, operations, and revenue optimization – all equipped with analytics, KPIs, and performance dashboards. Healthcare spending, by contrast, is often managed by HR or dedicated benefits teams that are not fully integrated into broader enterprise cost management frameworks. Strategic tolls like predictive analytics, utilization management metrics, performance benchmarking against outcomes, and vendor optimization audits are still emerging among employers. While 95% of companies say they prioritize medical costs, meaningful action beyond cost-shifting and preformatted plan design changes is still limited.
• Slow Response & Shortage of Disruptive Action –  Historically, many employers responded to rising costs by pushing expenses onto employees through higher premiums, deductibles, or cost-sharing. These reactive, cost-shifting tactics don’t address underlying cost drivers and can degrade employee experience. By contrast, proactive strategies—such as redesigning benefits to steer toward high-value care, auditing pharmacy benefit managers, or negotiating outcome-based contracts—require long-term planning and healthcare data infrastructure many companies lack or have no access to.
• Cultural Bias Toward Compliance Over Value – For many organizations, health benefits have been seen as a “cost of doing business” and a competitive recruiting tool, rather than a key part of operational performance. Other cost categories come with clear budgets, ROI expectations, and performance review; healthcare often does not. This current model of cultural orientation leads to simple maintenance & compliance only, instead of an added layer of transformation & accountability.

What happens when Employers start Managing Healthcare Strategically

There are clear indicators that employers are beginning to shift—but not quickly enough:

• Surveys show a growing number of employers considering plan design changes, vendor scrubs, and  targeted programs to steer employees to lower-cost, higher-quality care models.
• Employers increasingly partnering with benefit advisors with aligned incentives to audit pharmacy benefits, review rebate capture, and contract compliance—practices once rare but now becoming necessary given pharmacy’s outsized share of healthcare spend.
• Some employers are investing in preventive care and chronic condition management recognizing that healthier populations cost less in the long run and contribute to productivity.

However, these efforts remain uneven. Strategic management requires not just glimmers of initiatives but enterprise-wide systems for data governance, vendor accountability, and performance measurement—the kind of discipline employers apply to other company supply chains, technology spend, or travel budgets.

Conclusion: Healthcare Cost Management must become a Core Business Discipline

In today’s environment where healthcare trend is one of the fastest-growing cost categories, ignoring health benefits as a strategic cost center is no longer tenable. Employers must shift from a mindset of absorbing costs to one of actively influencing outcomes—using data, incentives, vendor governance, and care optimization strategies that mirror the rigor with which they manage other parts of their business.

The companies that succeed will be those that treat healthcare spend not as a passive obligation, but as an essential operational and financial domain worthy of the same precision  that drives their core business decisions. And along the path, they will discover not only a model that provides more control for employers, but also a solution that delivers affordable high-quality care with a great experience for everyone involved.

If you have any questions on this or other strategic benefits thinking, please contact us at 714.716.4060 or mike@my-EBP.com, or provide info here .