Your employer’s health insurance plan might be about to get a lot more expensive. Medical care costs rose 4.1% in August, according to the Bureau of Labor Statistics, their highest level in three years.
Experts warn this is setting up the steepest jump in health care costs in 15 years, with much of the increase expected to hit in 2026. That surge could spill into premiums, deductibles, and out-of-pocket bills for millions of workers.
1. Medical costs are rising faster than inflation
Overall inflation is running at 2.9%, but health care is moving much faster. Doctor visits are up 3.5%, while hospital and outpatient services climbed 5.2%.
These jumps go well beyond a monthly nuisance. They flow directly into insurance premiums and out-of-pocket bills, meaning households end up paying more even if the rest of their budget looks stable.
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2. Employers brace for record health expenses
According to surveys from Mercer and the Business Group on Health, employer health plan costs are projected to rise 8% to 9% in 2025 and into 2026. If those estimates hold, it would be the steepest increase since 2010–2011.
Companies are unable to absorb that kind of expense. They are under pressure to either cut costs elsewhere, rethink benefits, or push some of the increase onto workers.
3. Cancer drugs top the list of cost drivers
Specialty drugs, especially cancer therapies, have been the leading factor in rising employer health costs for four years in a row. Diagnoses at younger ages and at more advanced stages are making treatment costs higher.
Cancer drugs are among the most expensive medications on the market, and employers have little ability to negotiate prices. That leaves plans exposed to rising bills.
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4. Weight loss drugs are a close second
GLP-1 medications such as Wegovy and Zepbound carry list prices of more than $1,000 a month, according to drugmaker filings and insurer reports. Demand is booming, and surveys from the Business Group on Health show that nearly two-thirds of large employers now provide some access to them.
Employer pharmacy costs are projected to climb 11% to 12% in 2025 and 2026, much of it driven by prescriptions for these drugs, according to Mercer and other benefits consultancies.
5. Workers could face higher premiums and deductibles
More than half of large employers are considering shifting some of the rising costs to employees. That could show up as higher premiums, larger deductibles, or stricter co-pays.
On the Affordable Care Act exchanges, preliminary filings in many states point to rate hikes in the high single digits to low double digits for 2026 if subsidies do not offset the increase.
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6. Employers are looking for alternatives
Even with rising costs, most companies still view cost-shifting as a last resort. Many are instead narrowing eligibility for costly drugs, imposing step therapy, or pressing pharmacy benefit managers for better terms.
New models are being explored that could allow groups of employers to negotiate directly with manufacturers, particularly for emerging therapies.
7. The cash-pay market is changing the game
A growing number of workers are using flexible spending and health savings accounts to buy GLP-1 drugs directly. Cash-pay prices through platforms such as Lilly Direct and NovoCare can be nearly half of official list prices.
Industry data shows GLP-1 purchases are now the top spending category in HSAs and FSAs. The trend is strongest among higher earners, while lower-income workers often cannot afford the upfront costs.
What you can do now
Rising health care costs make it more important than ever to use every financial tool available. Contributing the maximum to a health savings account can provide a cushion for unexpected bills.
During open enrollment, review your options carefully. Sometimes a plan with higher monthly premiums but lower out-of-pocket maximums ends up saving money if you expect significant medical expenses. And if weight loss medications are on your radar, comparing cash-pay options now may help you avoid paying more later.
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