U.S. Employers Face Nearly 10 Percent Spike in Health Insurance Costs, Highest in 15 Years
Consultants Aon and WTW project steep premium increases for 2026 as insurers cite rising hospital bills, more medical use and costly GLP-1 drugs
U.S. employers are bracing for what consultants call the steepest rise in health insurance costs in at least 15 years, with average premiums projected to climb roughly 10 percent in 2026.
Benefits advisers Aon and WTW told the Wall Street Journal that employer health-coverage costs are set to surge about 9.5 percent and 9.2 percent next year, respectively, the largest increases since at least 2011. The consultants estimate the average family plan now costs about $25,500 a year — roughly the price of a small car.
Insurers and benefits consultants point to several drivers: rising hospital billing, broader use of medical services, more cases of cancer and chronic conditions among working-age adults, and the rapid adoption of expensive new therapies, particularly GLP-1 drugs used for weight loss and diabetes such as Ozempic, Wegovy and Zepbound. Blue Cross Blue Shield executives and other industry officials said aggressive provider billing, sometimes aided by artificial intelligence, is adding to cost pressures.
"It’s an unsustainable number for a lot of employers," said Shawn Gremminger, head of the National Alliance of Healthcare Purchaser Coalitions. He said employer reactions range "between upset, shocked, freaked out and resigned."
Some employers are already passing more costs to workers through higher payroll deductions and larger deductibles. Others are redesigning benefits to limit access to certain hospitals or specialists or to exclude coverage for some medications. A WTW survey found about 60 percent of large employers plan to consider switching insurers or pharmacy-benefit managers in the next few years.
Smaller and mid-sized employers described recent double-digit increases. Troy Morris, CEO of space-services company Kall Morris Inc. in Marquette, Michigan, said his firm had paid 100 percent of employee premiums but faced a 20 percent hike for the plan year beginning in August after a 9 percent rise in 2024. He said family out-of-pocket maximums in his plan rose to $10,000 from $8,150.
Mutual of Omaha, which employs about 6,300 people, reported double-digit cost growth this year and moved to drop coverage of GLP-1 drugs for weight loss. The company said its pharmacy-benefit manager warned it would lose lucrative rebates if it attempted to institute a program to manage patients’ weight-loss maintenance.
"We’re certainly frustrated," said Steven Schlange, vice president of human resources at Mutual of Omaha.
Executives at some Blue Cross Blue Shield plans described the escalation as unprecedented. Pam Kehaly, chief executive of Blue Cross Blue Shield of Arizona, called the trend "the worst I’ve seen." Kirk Roy, chief actuary at Blue Cross Blue Shield of Michigan, said conditions once considered illnesses of old age — including atrial fibrillation and degenerative joint problems — are appearing more often among younger, working-age employees.
Employers are weighing a range of responses as they prepare budgets for 2026. Some plan to shift more of the cost burden to workers through higher premiums or deductibles; others are exploring plan design changes, narrower provider networks or aggressive pharmacy-management strategies. The prospect of switching insurers or pharmacy-benefit managers reflects growing willingness among large purchasers to seek new contracts to contain costs.
Analysts say the projected jump follows years of already sharp increases and could complicate hiring and retention strategies at a time when labor markets remain tight in many sectors. Insurers and industry groups have warned that absent changes in provider pricing, drug rebate structures or utilization patterns, employer-sponsored health benefits will continue to face upward pressure.
The projections from Aon and WTW provide the earliest comprehensive industry forecasts for 2026 and underscore the scale of the challenge companies say they face in keeping benefits affordable for employees while controlling operating costs.
(Reporting synthesizes public statements and consultant projections.)