Health benefit cost increases expected to hit 15-year high, Mercer warns

2026 will mark the fourth consecutive year of substantial health benefit cost growth, signaling “mounting pressure on employers’ healthcare budgets.”

Sept. 9, 2025 - HR Dive
Ginger Christ, Editor

Dive Brief:

• The cost of health benefits per employee could climb an average of 6.5% next year ・the highest increase since 2010, according to preliminary results from Mercer’s 2025 National Survey of Employer-Sponsored Health Plans, released Sept. 4.
• The record increase comes even after employers calculated in planned cost-reduction efforts, Mercer said. Had they not made any changes to their plans, the average increase would have been closer to 9%.・/li>>
• 2026 will mark the fourth consecutive year of higher health benefit cost growth; for the previous decade annual increases were around 3%, Mercer said. The outsized increases signal “mounting pressure on employers’ healthcare budgets.”

Dive Insight:

“Health benefit cost trend has two primary components ・healthcare price and utilization. Right now, both are rising,” Sunit Patel, Mercer’s U.S. chief actuary for health and benefits, said in a news release.

While advances in diagnostics and therapeutics, such as cancer treatments and weight-loss drugs, can lead to better health outcomes, they tend to be more expensive, Mercer said. At the same time, inflation and the ongoing consolidation of providers have led to higher prices, the report found.

Meanwhile, utilization is up, likely in part due to delayed or missed care during the COVID-19 pandemic, Mercer said.

“The rise of virtual healthcare - and growing consumer acceptance of it, particularly in behavioral health - is also affecting utilization patterns because it removes geographic barriers to care and can be a more convenient option for patients,” Patel said.

In response to rising costs, 59% of the more than 1,700 U.S. employers surveyed said they plan to make changes to their plans to cut costs in 2026, compared to 48% in 2025 and 44% in 2024. Employers said they were considering raising deductibles and other cost-sharing provisions, as well as strategies that wouldn’t shift costs to employees.

The Business Group on Health’s latest annual healthcare benefits survey, released in August, found that employers might shift more costs to employees through premium contributions.

So far, only 12% of businesses said they were already increasing overall employee contributions, and only 9% were increasing employees’ out-of-pocket costs, BGH found. But a majority said they were at least somewhat considering one of the options to help with cost increases.

However, BGH’s president and CEO warned against that approach. “Passing cost increases is a Band-Aid approach,” Ellen Kelsay said. “It does not fix the long-term cost dynamic.” Instead, employers will need to work with vendors to address costs, Kelsay said.