US Employer Health Benefit Costs Set for Steepest Rise in 15 Years in 2026

American employers and workers are bracing for a fourth consecutive year of elevated healthcare cost growth in 2026, with the increase reaching a 15-year high. According to Mercer's National Survey of Employer-Sponsored Health Plans, which drew responses from over 1,700 US employers, the total health benefit cost per employee is expected to rise 6.5% on average in 2026 — the highest increase since 2010 — even after accounting for planned cost-reduction measures. Without any plan changes, the increase would have been nearly 9%. The average cost to insure each worker is projected to exceed $18,500.

The cost pressure is being driven by both rising prices and increased utilization. Key factors include the growing prevalence and cost of cancer treatments, the explosive demand for GLP-1 weight-loss medications such as Ozempic and Wegovy, the continued consolidation of healthcare providers into larger systems with greater pricing power, general healthcare wage inflation, and rising mental health service utilization. The share of very large firms covering GLP-1 drugs for obesity soared to 43% in 2025, and nearly 60% of large firms reported usage higher than predicted.

Workers will feel the impact directly. Since employees' share of premiums typically rises proportionally with overall costs, paycheck deductions for health coverage are expected to increase 6-7% on average. At the same time, 59% of employers plan cost-cutting changes — up from 48% in 2025 — often by raising deductibles and copays, which shifts more out-of-pocket costs onto plan members when they seek care.

The pressure is even more acute in the individual market. Affordable Care Act marketplace benchmark premiums rose an average of 21.7% for 2026, far outpacing the employer market, largely because insurers face increased risk from the expiration of enhanced premium tax credits and other policy changes. Enrollees' actual premium payments are expected to spike dramatically due to the loss of those subsidies. Meanwhile, Medicare Part B premiums rose nearly 10%. The New York Fed found that rising health insurance costs are also dampening wage growth, with businesses reporting that wages would have grown about one percentage point higher had health costs held steady.