‘Quiet alarm bell’ on US health care costs: Employers backed into a corner, workers paying the price

The near-term outlook is for renewed cost shifting to employees, tighter coverage for expensive drugs such as GLP-1 drugs, and greater political debate about price growth – with no clear, scalable solution in sight.

The new distinct reality

KFF, health research group Employer survey released Average family premiums rose about 6% in 2025 to nearly $26,993, with workers contributing about $6,850 in total. Employers cite prescription drugs, chronic diseases, and high utilization as the main cost drivers, according to a New York Times Survey report. The total increase over five years is now about 26%, and early indicators point to another upward trend in 2026, in the absence of real cost containment.​

Premium acceleration is not limited to the employer market; Broader analyzes point to rising costs across sectors, with forecasts that 2026 will bring the biggest increases in more than a decade if plan design changes do not offset the underlying trend. Employers are preparing for increases approaching 9% in the absence of new limits, increasing pressure on benefits budgets and household finances.​

Several forces are converging: rising hospital prices, continued swelling of labor supply, and intense use of services as deferred care during the pandemic comes back online. A growing share of spending is tied to high-cost medications, including weight-loss and cardiovascular risk medications, which many employers will cover in 2025 but may rein in as budgets tighten.​

Consolidation of health systems has enhanced negotiating leverage over prices, while improved access through virtual care has increased utilization, especially in behavioral health. Employers also point to the growth of specialty pharmacies and pressures on the supply chain, creating a cost pile that traditional benefit adjustments struggle to shake off.​

KFF CEO Drew Altman He argues Corporate tools — from tight networks and direct contracting to wellness, transparency, and chronic care programs — have only generated incremental gains because employers avoid pushing changes that trigger employee backlash. In a fragmented system with concentrated provider capacity, the “quick saver” method still has higher deductibles and cost-sharing when premiums rise.​

With few new levers and “quiet alarm bells” about demand for GLP-1 and hospital price increases, Altman warns of a potential return to cost shifting in 2026 and potential rollbacks or stricter management of coverage for weight-loss drugs. He also points out that recent cuts in federal spending do little to address underlying prices, leaving employers and families vulnerable to continued premium growth.​

Experts warn that 2026 could bring more A huge jump in benefits and costs Since 2010, even after planned cuts, employers have been accelerating plan changes that shift more costs to workers. In surveys, more than half of companies expect to increase deductibles, cap their out-of-pocket funds, or redesign plans to moderate this trend. Employees should expect a 6% to 7% increase in payroll deductions and stricter formulas.​

Employers are Increasing scrutiny pharmacy contracts and GLP-1 coverage, with many exploring stricter eligibility, documentation, and network caps to control spending, even as they invest in mental health access and “high-performing” networks to direct care to lower-cost, higher-quality providers. These moves may moderate the underlying cost trajectory, but do not reverse it.​

KFF’s cost containment could become a bigger item on the agenda in the capital as pressures on insurance premiums intensify, but consensus on tackling prices – especially hospital and drug costs – remains elusive. State experiences in setting caps on hospital cost growth are beginning to emerge, but the national framework lacks alignment and bargaining power to bend the trend in the near term.​

The expiration or change of federal subsidies in other markets could increase consumers’ exposure, with KFF estimating that the lapse of premium-enhancing tax credits will more than double next year’s average market premium payments — evidence of how sensitive affordability is to policy support. Although it does not relate directly to the employer market, it highlights the risks of price growth for households.​

We expect premium growth to outpace wage gains again, as employers rely on more stringent plan designs, higher employee cost shares, and closer administration of specialty medications such as GLP-1s. If the underlying drivers—provider prices, specialty pharmacies, and utilization—remain high, the next wave of employer responses could extend to narrower networks and more direct contracting, but the risks of disruption will limit scale.​