Why Finance May Be HR’s Best Partner in the Healthcare Cost Battle

With healthcare cost increases estimated to hit 9% in 2027, a strengthened collaboration between HR leaders and members of the finance department may help address potential organizational challenges — specifically, keeping benefits competitive while still supporting employee well-being.

“These decisions can’t be made in isolation,” said Lexi Clarke, the chief business operations and HR officer at compensation software company Payscale. “If you only focus on optimizing a spreadsheet, you could accidentally damage how people experience their benefits and total compensation package.”

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‘A Dynamic Duo’

Additional research from risk management and HR consulting firm Aon predicted medical costs will increase at slightly lower rates in 2027 compared to 2026, but those projections aren’t a signal for businesses to be less vigilant, said Michael Pedel, the firm’s head of global benefits.

“A lower medical trend rate means healthcare costs are rising more slowly, not that they are declining,” he explained. “Medical costs are still expected to rise at more than three times the rate of general inflation, while pressures including chronic disease, aging populations and demand for advanced treatments remain firmly in place. Employers should not be complacent and should continue to look to proactively managing medical claims costs.”

According to Pedel, an alliance between HR and finance can yield greater returns than disjointed efforts. This alliance merges data-backed cost management strategies with intentional plan design and personalized benefits, he said.

“Pulling finance into the conversations as early as possible allows you to manage not only the outcome but how you get there,” Clarke added. “Neither function has the full picture alone, and healthcare is exactly the kind of decision that can punish you for pretending otherwise. In the best of partnerships, the combination of HR and finance working together can be equated to a dynamic duo.”

What Finance Brings to the Table

Finance brings the broader context of the organization’s financial plan, analytical rigor and strategy, said Clarke.

“My CFO [chief financial officer] doesn’t think just about the 12 months ahead of us; he thinks in the four years after that,” she said. “That has opened my eyes to how decisions we make for the short and medium term can compound over time, and what impact that can have on the organization.”

According to Kathryn Davis, Aon’s head of global benefits analytics, the finance team also delivers a focus on the full costs of healthcare and helps pinpoint the financing mechanisms that best fit the organization’s goals of balancing employee support and affordability

“Each function benefits from a deeper understanding of the other’s priorities, creating opportunities for more effective collaboration and better outcomes for both employees and the organization,” she said.

What HR Brings to the Table

On the other side, HR supplies the ability to use employee data to personalize benefits, and they understand how to close the gap between the support the organization intends to provide and what employees are actually experiencing, Davis said, adding that by making health coverage decisions together, HR and finance can ensure those choices account for both cost and workforce implications.

Clarke noted one unique HR strength is recognizing the “qualitative signal” that is never enumerated in a financial model.

“[They] know the pulse of the organization, including anticipating what questions people may ask, where the risk could be and where confusion is about to become attrition,” she said.

Additionally, the cheapest option on paper is rarely the cheapest option overall, Clarke said, meaning if a change in benefits erodes trust or makes your best people harder to keep, you’re going to pay for those “savings” elsewhere.

“Good cost control is knowing where a dollar actually moves the needle and where it’s dead weight,” she said.

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