Healthcare costs for businesses to rise 8.5% in 2026, PwC survey reveals
Employers plan to counter the cost increase by shifting more of them to their workers.
Healthcare costs for businesses are expected to increase by 8.5% in 2026, as more employers plan cost shifts to workers, recent trend reports found.
The projected 8.5% increase next year among employers covering 125 million workers and their families was determined by an annual PwC survey of health plan actuaries. The 2026 increase for employer-sponsored insurance (ESI) matches their 8.5% 2025 spending increase. But the 2025 increase was an upward revision from 8% PwC had projected last year.
The ESI increase is even greater than the 7.5% increase expected for the individual market, which has experienced well-documented pressure from expiring subsidies and an increased anti-fraud push.
Factors pressuring ESI margins include:
- Rising claims from increasing hospital and health system operating costs
- Expanding innovations among providers to collect additional revenue
- Climbing behavioral health spending
- Spending on drugs, such as GLP-1s and newly launched drugs
“Commercial plans are experiencing some success in managing the total cost of care,” said the PwC report. “Still, in 2026, medical cost trend is once again hovering at rates reminiscent of 15 years ago.”
Employer response
A separate recent survey from Mercer, an employer benefits consulting firm, found more large employers will likely reduce benefits in 2026 as they try to control fast-growing health benefit costs.
More than half of the large companies surveyed by Mercer planned to increase deductibles and other out-of-pocket costs to control their healthcare costs next year — up from 45% who planned that last year. Other surveys have found smaller employers generally have higher healthcare costs and pass along much more of those to their employees.
The plans of large employers are a shift from recent years when a tight labor market and concerns about healthcare affordability made those businesses reluctant to shift healthcare costs to employees, according to Mercer.
“While short-term cost containment actions might be needed to address current budget realities, we also see some employers using longer-term strategies, such as offering narrow network plans that emphasize high-quality, high-value care,” Ed Lehman, US health and benefits leader for Mercer, said in a press release. “These strategies may improve health outcomes or make healthcare more affordable for employees.”
Another change is that 35% of large employers will offer a non-traditional medical plan option in 2026 — up from 6% this year — to provide choices to employees with a range of medical and financial needs. Those include variable copay plans with no- or low-deductible designs and set copayments for services based on individual providers’ fees. Such copays are fixed and communicated up front, which allows workers to select lower-cost providers.
Hospital finances
The PwC report also highlighted pressures on health system finances. It found better margins than the COVID-19 pandemic lows, but they remain less than pre-pandemic levels. Specifically, the industry-wide 2.10% operating margin for full-year 2024 was less than the 7.00% margin in 2019.
PwC warned 2025 margins may sink further, based on reported results from the first quarter.
“While major hospital systems have reported increasing revenues in the wake of higher utilization and favorable shifts in payer mix, ongoing pressures from high inflation and escalating wage indices continue to challenge margin recovery,” said the report.
Dampening Medicare and Medicaid revenue have strained provider finances, said the report, and they will worsen as provisions of the One Big Beautiful Bill Act (H.R.1) are rolled out in coming years.
“With constant inflationary pressure on expenses, providers are seeking rate schedule increases, specifically in private insurance contracts, in the coming contract negotiation cycles,” said the PwC report.
However, it found a nearly 14% increase in commercial rates is required to cover the 6-7% trend in health system operating expenses.
“Hospitals will need to make significant adjustments in their commercial contracts to match the rise in costs, especially as public reimbursement rates remain stagnant or even fall and the number of uninsured patients rises as the H.R. 1 policy changes go into effect,” said the report.
