Business Group on Health is the leading non-profit organization representing employers’ perspectives on optimizing workforce strategy through innovative health, benefits and well-being solutions and on health policy issues. According to a new report it published this week, for the 2nd year in a row, health care costs sharply outpace projections, largely due to prescription drugs, chronic and complex conditions, persistent delivery system flaws.
Employers will need to act with greater urgency and willingness to be bold as they head into 2026 after a second year of actual health care costs sharply outpacing projections, according to Business Group on Health’s 2026 Employer Health Care Strategy Survey, released today in Washington, D.C.
Employers predict that health care cost trend increases for 2026 will come in at a median of 9%, offset to 7.6% with plan design changes. These somber forecasts come as more employees use GLP-1s for obesity, receive cancer diagnoses and use mental health services, the survey showed. On a compounded basis, costs in 2026 are likely to be 62% higher than 2017 levels.
“In this challenging environment, employers remain firmly committed to an ongoing investment in employee health and well-being,” said Ellen Kelsay, president and CEO of Business Group on Health. “Yet they will need to make bold and strategic moves to contain costs, sometimes disrupting health care models along the way.”
Kelsay added, “For instance, we will see them rigorously evaluating benefit offerings, vendor performance and patient outcomes. We will also see more employers exploring non-traditional health plan and pharmacy benefit manager (PBM) models. And as employers urge workforces to use health plan resources and navigation tools to find high-value care, we’ll see more people using primary care and getting recommended screenings and immunizations.”
Employer respondents said other interrelated priorities for the coming year were affordability for both their businesses and workforces; a greater reliance on utilization management and weight management programs in concert with GLP-1s to ensure optimal outcomes in obesity treatment; and assessment of mental health access and appropriateness of care.
The Business Group on Health survey gathered data on key topics related to employer-sponsored health care for the coming year. A total of 121 employers across varied industries, who together cover 11.6 million people, completed the survey between June and July 2025.
Expensive obesity medications play a significant role in overall health care cost increases, and they will continue to be a challenge. Fully 79% of employers have seen an uptick in the use of GLP-1s, while an additional 15% anticipate seeing such an increase in the future. In addition, the percent of employers covering GLP-1s for conditions other than diabetes will stagnate as employers try to stabilize their health care costs, while more of those that cover these medications for weight loss will require utilization management, prescriptions from specific providers, participation in a weight management program and higher expectations from vendor partners to deliver sustainable, cost-effective financial models for this class of medications.
A systemic overhaul of the pharmacy supply chain is essential to address pharmaceutical costs for both employers and employees. While most employers use plan design approaches and other strategies offered by their PBMs, pharmacy cost pressures also have resulted from rising prices, a robust pipeline of expensive therapies and cost-shifting from proposed changes to Medicare and Medicaid. In 2024, nearly a quarter of all employer health care spend (24%) went to pharmacy expenses. Further, employers see no relief on the horizon, with a forecast of an 11% to 12% increase in pharmacy costs heading into 2026. This cannot be remedied by plan design changes, and employers need to explore PBM models that champion transparency and rely less on rebates.
Cancer is the top condition driving employer health care costs for the fourth year in a row, made worse by a growing prevalence of cancer diagnoses and the escalating costs of treatment. Accordingly, employers will have a greater focus on cancer prevention and screening coverage, including alternatives to colonoscopies, expanding coverage of breast cancer screenings and removing age restrictions on preventive care coverage. Employers also recognize that access to high-value treatments is essential, with about half offering a cancer COE in 2026, and another 23% considering doing so by 2028.
Most employers have seen an increase in the use in mental health services, making it an emerging cost driver. As employers continue to seek ways to expand access to mental health services, they want to ensure that offerings are high-quality and appropriate. Fully 73% of employers reported an increase in mental health and substance use disorder services, while another 17% anticipate a future increase.