Employer-sponsored healthcare plans in the U.S. are set to face the biggest cost hike in 15 years next year, leading to pay cuts and larger out-of-pocket expenses for employees amid rising healthcare prices and utilization, according to a recent survey from HR consulting firm Mercer.
Using responses obtained from more than 1,700 employers through Aug. 12, the survey shows that the total health benefit cost is expected to increase 6.5% on average per employee next year, marking the biggest rise since 2010.
While Mercer’s projection assumes cost reduction measures from employers, the average total health benefit cost is expected to rise further to the 9% level if employers don’t revise their current plans.
2026 will mark the fourth consecutive year when health benefit costs have grown significantly following a decade of modest annual increases averaging about 3%, Mercer said last week, announcing preliminary results from its 2025 National Survey of Employer-Sponsored Health Plans.
“Health benefit cost trend has two primary components—healthcare price and utilization. Right now, both are rising,” said Sunit Patel, Mercer’s US Chief Actuary for Health and Benefits, as reasons for the surge.
While treatments such as cancer medicines and newer GLP-1 weight loss drugs from Novo Nordisk (NVO) and Eli Lilly (LLY) lead to better health outcomes, they typically come with higher price tags than the treatments they replace. Among other factors leading to price rises are inflation and the consolidation of healthcare providers, which increases their ability to negotiate reimbursement levels.
The popularity of virtual care and pent-up demand for delayed or missed medical care after the pandemic, along with other factors, have led to strong utilization rates, which Patel said have been rising over the past two years.
“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,” he added.
While 48% and 44% of employers implemented cost-cutting changes to their plans in 2025 and 2024, respectively, in 2026, 59% of employers are set to introduce cost-cutting measures such as higher deductibles, which can lead to higher out-of-pocket costs for employees.
Additionally, employees can also expect a 6% – 7% average increase in paycheck deductions for health coverage in 2026, as rising plan costs also cause a proportional increase in their share of premiums.
Health insurers: UnitedHealth (NYSE:UNH), Humana (HUM), CVS Health (NYSE:CVS), Cigna (NYSE:CI), Clover Health (CLOV), Alignment Healthcare (ALHC), Centene (NYSE:CNC), Molina Healthcare (MOH), Elevance Health (ELV)