5 Strategies to Contain Your 2026 Healthcare Costs

Another year, another budget cycle. With 2026 health benefit costs expected to rise significantly, benefits leaders are facing their most critical planning cycle in a decade. Employers are bracing for another expensive year. Industry experts expect 2026 health benefit costs to rise around 9%, continuing the elevated trend from 2023–2025. The Business Group on Health (BGH) reports a median 2026 trend of 9% before plan changes (7.6% after), in its 2026 Employer Health Care Strategy Survey, while PwC’s Health Research Institute projects 8.5% in the group market. Aon has warned that U.S. employer costs could be up by ~9.5%. 

These projections stem from five critical cost drivers—drivers that benefit leaders can strategically counter with targeted action. Below are the five drivers of employer healthcare costs in 2026, along with pragmatic moves benefits leaders can make now to stay ahead of the curve. 

1. Rising pharmacy spend—especially GLP-1s for obesity and diabetes

While specialty drugs, including cancer treatments, remain the fastest-growing segment of spending, employers report that GLP-1 medications are significantly impacting costs: 72% say GLP-1s affected their 2025 costs to a “great” or “very great” extent, and the pressure is rolling into 2026. Separate survey data from SHRM shows GLP-1s represented ~10.5% of total annual claims in 2024, up from 6.9% in 2022. 

PwC notes pharmacy is trending 2.5 percentage points higher than the overall medical trend, underscoring the urgency of drug management in employer plans. Segal’s 2026 trend report notes that 62% of specialty drug trends (pre-rebate) are utilization-driven, as new, high-cost therapies displace cheaper ones. 

The Benefit Leader Checklist: Strategic Pharmacy Management

• Strategic GLP-1 coverage policies and clinically-responsible cost containment through clinical criteria, prior authorization, and data-driven re-authorization. Paired with a GLP-1 companion program implementing proven lifestyle/behavioral interventions to improve outcomes and reduce waste.

• Aggressively pursue Biosimilars and Generics adoption, leveraging the availability of new generics and biosimilars to create significant savings, as this is consistently cited as a top cost deflator.

• Leverage outcomes-based contracts where feasible; audit PBM performance. Employers are increasingly seeking more transparent arrangements to ensure their pharmacy benefit plan is performing as intended. 

• Expand condition management around obesity, diabetes, and cardiometabolic risk to reduce downstream spend. Focus on programs that offer a singular program to reduce point solution fatigue for the teams managing the platforms and the members utilizing them. 

2. Complex, high-cost chronic conditions and cancer

Cardiometabolic conditions such as obesity, diabetes, hypertension, and high cholesterol are now one of the most persistent and expensive drivers of employer healthcare costs. According to the CDC, roughly six in ten U.S. adults live with at least one chronic condition, and cardiometabolic issues account for a significant portion of them, increasing both direct medical costs and indirect productivity losses.

These conditions are expensive not just because they are common, but because they are long-term and often progressive. Managing diabetes alone costs employers an estimated $20 billion annually in lost productivity, while obesity adds another $173 billion in medical costs nationwide. 

Cardiometabolic disease is also a risk amplifier for other high-cost conditions, particularly certain cancers. Research has shown strong associations between obesity, insulin resistance, and increased risk of cancers, including colorectal, breast, and pancreatic. With rising rates of obesity and diabetes, employers face a dual challenge: ongoing medication and management costs, and potential downstream oncology expenses when comorbid conditions overlap.

Cancer itself remains one of the largest drivers of employer healthcare spending. High-cost novel therapies, earlier detection through expanded screening, and deferred care from pandemic years all contribute to the rising trend lines in oncology. According to Aon, 5% of members account for 60% of total medical and pharmacy costs, a cohort of high-cost claimants often comprised of members managing cancer and cardiometabolic diagnoses.

The Benefit Leader Checklist: Condition Management and Quality

• Promote sustainable management of weight, glucose, blood pressure, and cholesterol. Move beyond short-term pharmacotherapy by combining GLP-1 coverage with digital or AI-driven behavioral coaching that addresses nutrition, activity, and long-term adherence.

• Leverage predictive analytics. Utilize claims and biometric data to identify members who are at risk of developing multiple conditions, providing additional support before conditions and associated costs escalate.

• Navigate high-cost cases effectively. Offer cancer and chronic-condition navigation, second-opinion services, and access to centers of excellence with bundled or prospective rates.

• Align stop-loss coverage and care programs. Regularly assess large-claimant exposure and coordinate with vendors to ensure complex cases are proactively managed.

3. Hospital prices, consolidation, and “site-of-care” dynamics

Hospital pricing and consolidation continue to be a cost multiplier for employers, especially for members managing chronic and cardiometabolic conditions like diabetes, hypertension, and obesity. These members often require recurring laboratory tests, imaging, and treatment for related complications, meaning that where care is delivered can significantly impact total spend.

The latest RAND national hospital price transparency study found that employers and private insurers paid an average of 254% of Medicare rates for the same hospital services in 2022, with state averages ranging from 162% to 346%. Prices for common outpatient services are significantly lower in ambulatory surgery centers (ASCs) or independent clinics, yet as hospitals continue to acquire physician practices, more encounters are being billed as hospital outpatient, often with added facility fees. 

For cardiometabolic populations, this trend compounds cost pressures. A simple shift, from an independent imaging center to a hospital-based facility, can drastically impact costs. Routine procedures become major cost drivers when delivered in hospital settings versus alternative sites of care.

Moreover, hospital consolidation limits employer leverage in negotiating lower rates for chronic disease management, cardiac procedures, and follow-up care. As integrated systems gain regional market share, employers face fewer alternatives and higher average costs.

The Benefit Leader Checklist: Site-of-Care Optimization

• Implement a Site-of-Care Strategy for chronic and cardiometabolic services. Shift appropriate diagnostics, treatments, and follow-up visits from hospital outpatient departments to Ambulatory Surgery Centers (ASCs), retail clinics, or office-based settings with transparent pricing and equivalent quality of care.

• Leverage data and analytics for improved transparency. Identify where cardiometabolic and cancer-related services are billed at rates higher than the benchmark, and incentivize members to choose facilities with lower costs and higher value.

• Collaborate with partners on integrated chronic care programs. Align navigation, disease management, and pharmacy benefit programs to guide members to the most efficient and effective care locations.

4. Behavioral health demand and access

Utilization of mental and behavioral health services remains in high demand. PwC cites behavioral health as a core factor behind 2026’s above-trend cost growth, and BGH notes increased employee use of mental health services among the top contributors to rising spend. Virtual access has expanded care but also unlocked significant new utilization. 

The Benefit Leader Checklist: Integrated Mental Health

• Integrate behavioral health services with all primary care and chronic disease programs, emphasizing collaborative and comprehensive care models.

• Ensure ease of access, including in-person, virtual, and hybrid options, that meet members where they are and provide them with adequate support.

• Target high-cost comorbidity clusters (e.g., depression + diabetes/obesity) with whole-person care pathways. Mandate and monitor adherence to quality and performance metrics for all behavioral health partners.

5. Inflationary pressures, workforce costs, and a higher baseline of utilization

Even outside of pharmacy and hospitals, the cost baseline is higher than ever. Medical group operating expenses climbed ~11% year-over-year in 2025, attributed to staffing and supply costs, which are driving costs universally. Meanwhile, the overall medical cost trend is expected to be at ~8.5% in 2026, indicating a continued trend of rising costs for the foreseeable future. 

Employers began 2025 at a “cost disadvantage” after two consecutive years of higher-than-expected increases, and that momentum is expected to continue into 2026. 

The Benefit Leader Checklist: Plan Design Fundamentals

• Focus plan design on promoting primary care among members and value-based arrangements that reward prevention, access, and total-cost control.

• Implement nudges and reminders into plan design that align with informed care choices without creating access barriers.

• Conduct a comprehensive RFP or audit of all underperforming vendors to eliminate programs that do not deliver quantifiable value.

Combatting Rising Costs in 2026: The Action Summary

Given the magnitude and persistence of these cost drivers, benefit leaders should balance near-term cost containment with longer-term plan design:

1. Focus on optimizing pharmacy: Update GLP-1 guardrails; pursue outcomes- or value-based agreements; and aggressively push for biosimilar adoption, while coordinating pharmacy and medical benefits to ensure complete specialty spend visibility.
2. Focus on the few members who drive the most: Identify and proactively manage high-risk, high-cost members by pairing them with high-quality care and COE strategies that include stop-loss protection.
3. Move care to the right place: Implement site-of-care redirection and address facility-fee exposure; use data to inform contracting and member incentives for ASCs and non-hospital settings.
4. Integrate behavioral health: Embed mental health into chronic care pathways; measure outcomes and network accessibility, and effectiveness to ensure value.
5. Tighten the fundamentals: Value-based primary care, navigation, price transparency, and plan designs that reward quality and total-cost performance.

Book a Strategy Session with Lark

Your 2026 budget decisions are critical. Schedule a session with our team to analyze how Lark can support in delivering cardiometabolic outcomes with real ROI. Schedule now.