Mercer: Health Benefit Cost Jump Will Hit 15-Year High in 2026

Total health benefit cost per employee is expected to rise 6.5% on average in 2026, the highest increase since 2010, according to preliminary results of Mercer’s 2025 National Survey of Employer-Sponsored Health Plans. If employers did not make any changes to their current plans, the overall average increase would have been nearly 9%.

Based on projections from more than 1,700 U.S. employers, the consulting firm’s survey report shows 2026 will be the fourth consecutive year of elevated health benefit cost growth following a decade of moderate annual increases averaging only about 3%, signaling mounting pressure on employers’ healthcare budgets.

“Health benefit cost trend has two primary components — healthcare price and utilization. Right now, both are rising,” said Sunit Patel, Mercer’s U.S. chief actuary for health and benefits.

Behind the Rising Costs

This period of faster cost growth stems from a convergence of factors, according to Mercer experts.

These experts noted advances in diagnostics and therapeutics, such as cancer treatments and weight-loss drugs, produce better outcomes but cost more than the treatments they replace. In addition, the continuing consolidation of healthcare providers into fewer, larger systems has given them greater ability to work with insurers in setting reimbursement levels. More recently, inflation across the general economy, including higher wages in the healthcare sector, has contributed to price increases.

Additionally, utilization rates for various health services have increased over the past two years.

“The rise of virtual healthcare — and growing consumer acceptance of it, particularly in behavioral health — is also affecting utilization patterns because it removes geographic barriers to care and can be a more convenient option for patients,” Patel said.

How Employers Are Responding

The report found 59% of surveyed employers will make cost-cutting changes to their plans in 2026 — up from 48% making changes in 2025 and 44% in 2024. However, many employers stated they also will pursue strategies to slow cost growth without shifting cost to employees. The most common cited strategies were:

• Greater focus on managing high-cost claims.
• Measuring the performance of health programs to ensure they provide value.
• Making behavioral healthcare more accessible.  

“Employers have been unwavering in their commitment to supporting employees’ mental health since the early days of the pandemic,” said Ed Lehman, a U.S. health and benefits leader at Mercer. “They recognize it’s essential for employee well-being and overall business performance.”

Considerations for Employers

Although final survey results won’t be released until later this year, Mercer experts suggested now might be the time to help employees understand the value of the lower-cost options. Patel said employees could expect paycheck deductions for health coverage to rise 6% to 7% on average in 2026, as their share of the premium typically increases proportionally with overall plan cost. Also, many employers are expected to raise deductibles and copayments to limit premium increases, which could mean higher out-of-pocket spending for some employees.

Since most employers offer more than one medical plan option, Mercer experts said employees may consider a non-traditional, high-performance network plan designed to help consumers access providers pre-selected based on quality and cost, which may offer lower out-of-pocket costs. A separate Mercer survey found more than one-third of large employers will offer some type of non-traditional plan in 2026.

Editor’s Note: Additional Content

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