Health care costs have been growing at an alarming rate in recent years, and they’re not slowing down. Surveys project that U.S. health care costs are likely to increase by 6.5% to, in many cases, over 10% in 2026.
Regardless of the exact figure, employers can expect their health care costs to continue to skyrocket throughout 2026. As the next year approaches, many employers remain curious about what is driving these increases. Here are key factors impacting rising health care costs in 2026:
- Specialty medications, specifically glucagon-like peptide-1 (GLP-1) drugs—High-cost, high-impact treatments, such as GLP-1s, biologics, biosimilars, and cell and gene therapies, are reshaping the pharmaceutical industry. The momentum behind specialty drug innovation shows no signs of slowing.
- Chronic health conditions—About 90% of health care spending is for people with chronic and mental health conditions. Moreover, many people have two or more chronic, high-cost diseases.
- Aging populations—Health care costs generally increase as people age. While life expectancy has increased significantly over the past 50 years, birth rates have trended down consistently.
- Cancer care—This has been the top driver of employer cost increases for four years in a row. Spending has worsened due to the growing prevalence of cancer diagnoses and the escalating cost of treatment.
- Health care labor costs—The worker supply continues to fall short of the growing demand for utilization.
Offering quality health care to employees carries a significant financial cost for organizations. It’s more than just organizations that pay the price for growing health care costs; such expenses are often shared between employers and employees.
Rising health care costs may be unavoidable, but informed employers can better understand these trends and act appropriately.
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