The escalating cost of health care will influence virtually all employers’ health and well-being strategies in the coming year, reported Business Group on Health, which today announced its Trends to Watch in 2026.
The Business Group had reported in August that employers anticipate a median 9% health care increase for 2026 in the United States, expected to drop to 7.6% with plan design changes.
According to the just-released trends report, which lays out recommended next steps, employers will need to act with heightened urgency to disrupt a system that fails to meet the needs of employers and employees alike. Employers will need to scrutinize all programs, vendors and delivery partners to ensure value; prioritize preventive care and chronic condition management; and better understand and adopt artificial intelligence, for instance.
“A volatile cost environment has been fueled by a complex and fragmented health care ecosystem, and it is faltering,” said Ellen Kelsay, president and CEO of Business Group on Health, the largest non-profit organization representing employers on critical health, well-being and workforce strategy issues. “Employers remain committed to providing robust health and well-being offerings, yet they must act swiftly and strategically to manage costs while boosting health outcomes.”
The full list of trends, which also touch on the pharmaceutical landscape, policy developments, health industry partners, alternative models and artificial intelligence, is below:
The year 2026 will be one of the most challenging affordability and cost-management years in recent history.
The rise in cost trend follows two consecutive years of actual health care costs exceeding employer forecasts. Multinational employers may see double-digit increases in their benefit costs in some regions, making health care spending a global burden.
Employers will get “back to basics” to improve health at scale.
Chronic diseases still represent top cost drivers for employers, and benefits leaders anticipate even higher condition-management needs in the future due to worsening population health and an uptick in the proportion of older people in the workforce. As a result, there is a need for prevention and condition support that is evidence-based.
Meanwhile, employees and their families should be encouraged to take greater ownership of their health by seeking effective primary care, following through on recommended screenings and accelerating efforts to prioritize overall health and well-being.
Pharmacy costs will continue to challenge employers, especially as policy developments impact pricing changes around the globe.
Pharmaceutical-based treatments have seen recent advances, such as curative cell and gene therapies for rare and difficult-to-treat conditions and the widespread use of weight loss medications to lower obesity rates. However, the resulting costs have near- and long-term implications for self-funded employers. As pharmacy spend grows and existing cost mitigation strategies falter, employers will seek to disrupt the current role of those along the pharmacy supply chain to drive value for employees and employees.
Industry partners will face increased scrutiny – as well as demands by employers for better outcomes.
Partners play a critical role in the support of employee health and well-being by providing services, industry expertise, innovation and data. As the pace of innovation has accelerated and offerings have expanded, employers have offered more partner programs. Still, these programs lack data and clinical integration and have uncertain results.
In 2026, as employers continue to streamline programs and vendors in pursuit of robust clinical outcomes, better employee experience and cost savings, partners will need to show that their services meet employers’ goals.
Employers will expect partners to innovate and use alternative models to address rising costs.
Employers experiencing year-over-year health care cost increases will expect their partners to innovate and evolve swiftly. These same employers may also want to try something beyond traditional plan approaches. From a coverage standpoint, some alternative plans/models are already in use: copay-based models, virtual-first approaches, primary care-centered adoption and even pre-set benefits plans that operate “network-less.”
Artificial intelligence will influence how employers and partners deliver health and well-being programs.
Artificial intelligence has the potential to revolutionize benefits management by reducing administrative burden, enhancing communication, refining personalization and augmenting the patient experience through care delivery and precision of diagnosis. Within care settings, AI enables a more rapid adoption of evidence-based practices while enhancing access to care and reducing duplicative care. At the same time, providers and health systems can leverage AI to optimize revenue, which in turn could contribute to growing costs for both employers and employees. Employers should also seek to understand the application of AI in any clinical setting, including the use of AI to supplement, or perhaps replace, intake processes and rudimentary care.
The rapidly changing health policy agenda will highlight employers’ pivotal role in health care.
A range of items are on the policy agenda, including the reform of pharmacy benefit managers (PBMs) and scrutiny of drug-manufacturer pricing. Potential federal legislative action could result in greater transparency in the pharmacy supply chain, and other bills may yield additional plan compliance burdens, raise fiduciary legal questions, and promote federal agency enforcement and potential overreach on employer plans.
Disruption of the current ecosystem will help to bring about sustained change.
Employers must compel both their leadership and employees to embrace change. The year 2026 will represent a time of change management driven by those in human resources, benefits and finance. Convincing employees that “change is good” in health care is challenging, yet doable, given the deep flaws of the current system.