Healthcare Costs Force Employers to Rethink Plans

Companies are preparing for significant changes to their healthcare plans as U.S.healthcare costs reach a two-decade high. A new survey by WTW, a global advisory and broking firm, reveals the extent of the problem.

The 2025 Best Practices in Healthcare Survey projects a 9.1% increase in healthcare costs for 2026, before any plan adjustments. This follows increases of 8.1% in 2025 and 7.0% in 2024. After plan changes are factored in, the projected increases are 8.0%, 7.0%,and 6.0% respectively.

These rising costs are pushing employers to consider drastic measures. One in three companies is contemplating major healthcare program changes within the next three years. The primary cost drivers? pharmacy expenses – particularly specialty drugs and GLP-1 medications – high-cost claimants, and chronic conditions like musculoskeletal issues and cancer.

Employers are focused on controlling medical and pharmacy costs, and ensuring affordability for their employees. Beyond these core concerns, they’re also prioritizing employee wellbeing, experience, and improvements to healthcare delivery.

Cost-shifting isn’t enough anymore. While still used, nearly 59% of employers plan to implement broader cost-saving actions over the next three years, a jump from 46% in the previous three years.These actions include adjusting program subsidies, adopting new plan designs, improving vendor efficiency, and encouraging more cost-conscious healthcare choices. employers also recognize the need to expand clinical programs,especially for cardiovascular health,musculoskeletal health,digestive health,obesity,and oncology,to better manage chronic conditions.

“Fewer employers are absorbing rising costs because it’s simply too expensive,” says the report. “They’re also avoiding aggressive cost-shifting because it can affect employee health and morale.”