Compounding healthcare costs may force some employers to take a hard look at the benefits they're offering to employees, according to a new survey.
The Business Group on Health released its annual deep dive into employers' healthcare strategies Tuesday and found that these firms are bracing for median cost increase of 9% in 2026, following two years of increases that outpaced their forecasts.
These companies started 2025 behind, according to the report, and that's putting them in a position where it's even more difficult to address the major challenges they face in the healthcare space.
This "troubling dynamic" proves that it's necessary for "bold and decisive actions from employers as well as many other industry stakeholders," said Ellen Kelsay, CEO of the Business Group, during a briefing with media.
There are a number of key factors playing a role in this trend. For one, ongoing demand for GLP-1s and other medications for weight loss is a significant cost driver. Many (79%) of those surveyed said they have seen an increase in GLP-1 use, and 15% anticipate an uptick down the line.
Nearly three-quarters (72%) said that GLP-1s are impacting their 2025 healthcare costs to either a "great" or "very great" extent, up from 56% who said the same a year ago.
The survey suggests that the number of employers covering these medications for weight loss may "stagnate" as they seek to control costs and that they may put additional guardrails in place to manage utilization.
For example, more employers that cover GLP-1s for weight loss expect to put utilization management protocols like prior authorization in place or institute requirements like participation in a weight management program or prescriptions distributed by specific providers.
Pulling back on coverage is also on the table, according to the study.
"This is also perhaps a lever that would result in a more immediate impact on health care spending, whereas the other actions may be slightly more delayed in terms of realizing cost impact," Kelsay said.
Among medical conditions, cancer is once again the leading driver of costs, and for the fourth year in a row. This trend is exacerbated by an increase in diagnoses and higher expenses for treatment. Given the rise in diagnoses, employers are putting a focus on prevention and screening coverage.
In addition, about half will offer a center of excellence for cancer care in 2026, with 23% considering one by 2028.
Mental health is also growing as a cost factor as employers invest further in offerings to manage mental health needs. Seventy-three percent of those surveyed said they saw an increase in mental health and substance abuse disorder services, and 17% said they anticipate an increase in the future.
With all these cost pressures at play, employers are looking closely at the effectiveness of their medical and pharmacy benefits and expecting vendors to prove the value they bring to the table. Forty-one percent of those surveyed said they are either switching to a new pharmacy benefit manager or seeking proposals, while 51% are doing the same for medical benefits or wellness vendors.
A growing number of employers are considering alternative PBMs and insurers as an option. These independent plans have the potential to "make it easier for employees... to access affordable, high-quality care," said Brenna Shebel, vice president at the Business Group.
"So increasingly, employers are looking to alternative health plan models as well as transparent PBMs to drive greater value within the healthcare system, and that includes pharmacy benefits," Shebel said.
For 2026, nearly a quarter (24%) of employers will offer an alternative health plan, and a further 36% are considering one as an option in the future. Similarly, 27% of employers will offer transparent PBM services in 2026, and 43% are considering them down the line.
"I do think we will see an environment where employers are going to be perhaps making some changes in their vendor lineup, some changes in the configuration of their programs, and that could mean some differences for employees, hopefully, though, with the end goal of making the plan a higher-quality plan and a more affordable plan," said Kelsay.