Dive Brief:
- Employers are planning on shifting more healthcare costs to employees next year as expenses soar and drug prices remain stubbornly high, according to a new report from Mercer.
- Sixty-six percent of employers with more than 500 employees told Mercer they’re likely or very likely to raise premiums next year. About half said they would increase cost sharing through other means like raising deductibles and increasing out-of-pocket maximums.
- Employers also said they plan to pull back on coverage of GLP-1s as the pricey medication pushes drug spend higher for the fourth year in a row.
Dive Insight:
Employers have been battered by stubbornly high healthcare costs as increasing drug costs and high-cost conditions like cancer drive up spending. Health benefit costs are expected to rise by 6.7% this year — the highest jump in 15 years — pushing the average cost per employee above $18,500, according to the Mercer survey, which was conducted from April 15 through May 8.
Employers say they plan to shift some of those costs onto employees, while curtailing benefits in areas of high spend. That includes GLP-1s, which are partially to blame for rising costs.
Originally developed as a treatment for diabetes, GLP-1s are increasingly being used for weight loss. Around 1 in 8 adults are taking the drugs to shed pounds or manage a chronic condition, according to health policy researcher KFF.
However, GLP-1s are notoriously expensive, with list prices that can reach around $1,000 per month. Those high prices have contributed to rising drug spend, which increased about 9% this year, according to Mercer.
Almost 30% of large employers said they took steps to tighten utilization controls of GLP-1s in order to control costs. Six percent of large employers said they dropped coverage entirely in 2026, and 5% said they planned to drop or are actively considering dropping coverage next year.
Large employers also said they were considering alternative health plan designs. Over 30% of large employers said they currently offer or will offer alternative plans like high-performance networks, smaller networks of providers selected on cost and quality metrics, in 2027.
Employers are also leaning on technology to control costs, including artificial intelligence. Twenty-seven percent of respondents said they currently use or plan to use AI in benefits navigation and customer support by next year. Employers are also leveraging AI in communications and advanced analytics.
