3 strategies to manage healthcare cost increases in your benefit plans

• Key Insight: Discover how targeted plan redesigns can blunt double-digit healthcare inflation without across-the-board cuts.
• What's at Stake: Rising benefits costs threaten employer margins and workforce access to necessary care.
• Expert Quote: Evaluate networks to achieve hard-dollar savings while protecting population health — Eric Miller, Segal.
• Source: Bullets generated by AI with editorial review

Healthcare costs are nearing double-digit increases, but benefit managers can make smart adjustments to their plans to brace for the impact. 

Employers are predicting a 9% increase in healthcare costs for 2026, according to a recent Business Group on Health survey — the largest annual jump in more than a decade. Revisiting and redesigning health plans may be the most effective way for organizations to protect both their bottom line and their workforce from the coming surge.

"It's a very challenging environment for employers," says Eric Miller, VP and consulting actuary at Segal. "They will need to evaluate their networks and look for ways to mitigate cost trends and achieve hard dollar savings while still doing everything to improve the health and well-being of their population." 

Read more: Stop overpaying for healthcare that doesn't work

Why are prices going up?

The healthcare price surge can be tied back to three main drivers, according to Segal: A rise in GLP-1 prescriptions, and the increased use and provider cost of mental health services. The National Institute predicted an overall 9-11% rise in prescription drug spending for 2025, due to employees' demands for expensive weight loss medications. In addition, almost 30% of Americans are currently using mental health services, according to Center for Disease Control, a significant jump from 22% in 2019.

At the same time, hospital stays, surgeries and doctor visits have also seen price increases. Because there are more patients needing care than there are providers available, hospitals and doctors have more power to negotiate higher payments, contributing directly to healthcare costs.

"It's important to consider what role these all play in your benefits package," Miller says. "Every employer or every plan sponsor is going to have a different population that they're [catering to] for different reasons. There is not necessarily a one size fits all approach to [keeping costs low]."

Read more: How are companies affording GLP-1 coverage?

How better health plan management can help

While there's no magic solution to address all of these issues, benefit managers can rely on a few key changes to see some relief, Miller says. For example, he suggests implementing a custom drug plan design prioritizing less expensive alternatives for weight loss medication. Instead of covering popular brand name drugs like Wegovy and Ozempic, which typically come with a higher price tag, a more customized drug plan can prioritize cheaper generic versions of the medication or medications with similar compositions that could yield similar results. 

Another option for leaders, Miller notes, is to leverage technology to identify members at risk for chronic conditions such as diabetes, cancer, or hypertension — helping prevent issues before they turn into costly emergency claims.

"There are tools that can recommend care schedules or best practices for people with those conditions to make sure that they're keeping up with their preventive screenings," he says. "Technology can help create these win-win scenarios where people are improving their health, and you're saving costs at the same time." 

Some organizations may even benefit from a longer-term strategy, according to Miller, such as an onsite clinic. A well-operated clinic can reduce ER, urgent care and specialist visits by improving access to care, and as the clinic matures, the ROI over time increases.

Read more: How Rx headwinds are reshaping plan design

"Sometimes the key is making sure that their employees are getting the care that they need," Miller says. "The cost savings aspect has to be a bit secondary." 

The first step for any leader looking to implement plan changes is to gather as much data and insight as possible on their workforce and their healthcare needs. Miller urges benefit leaders and plan sponsors to collect and use that information to negotiate with providers and select plans with the best in-network options for employees, especially since these price inflations may stick for a while. 

"There's not much reason to expect that these trends will moderate over the next year or two," Miller says. "The pressure is on employers to come up with solutions to help stabilize this environment."