Good morning!
Health care costs have been rising for years, and finding a way to shoulder that burden and keep benefit prices low has been top of mind for employers. But companies are reaching their limit, and becoming more willing to push costs onto their employees, according to a new report.
Around 51% of companies say they’re likely or very likely to make design changes to their plans in 2026 that will place a larger burden on employees, according to a new study from HR consulting firm Mercer. That’s up from 45% last year. Their methods are expected to include raising deductibles and out-of-pocket maximums for employees.
Health care costs for workers are already up. The average costs of those benefits are expected to grow by 5.8% this year, up from 4.5% last year, according to the report. That’s after accounting for any cost-reduction strategies, without which employers estimate that prices could actually rise around 8% this year.
This increase in health care costs is largely due to an increase in prescription drug prices. Well over half of employers (61%) are now actively looking for some type of alternative to typical pharmacy benefit contracts.
The increased popularity of GLP-1 weight-loss medications, which can cost around $1,000 per month per patient, is also contributing to higher benefit costs. Most organizations (77%) ranked managing the costs of these drugs as their highest priority when it comes to pharmacy benefits. But while the employers said they were more likely to add the coverage for 2025 than drop it, it’s unclear if that will be the case next year, according to the report.
“While the trend over the past couple of years has been to add coverage for GLP-1s approved for weight-loss, some employers facing large cost increases in 2026 may feel this coverage is out of reach,” says Alysha Fluno, pharmacy innovation leader at Mercer. “Employers are weighing the immediate costs of covering these drugs against the potential for generating savings down the road once their workforce’s health improves.”
In the future, employers may require more documentation from employees who use GLP-1s, increase the eligibility requirements, or limit the number of providers and pharmacies for the medication, according to the report.
“While short-term cost containment actions might be needed to address current budget realities, we also see some employers using longer-term strategies, such as offering narrow network plans, that emphasize high-quality, high-value care,” says Ed Lehman, Mercer’s U.S. health and benefits leader. “These strategies may improve health outcomes or make health care more affordable for employees.”
Brit Morse
brit.morse@fortune.com
