Health insurance prices in the U.S. have been spiraling for four consecutive years, and employers are now bracing for the highest spike yet in 2025—the biggest increase in 15 years, according to a wide-ranging survey of more than 1,700 employers. The National Survey of Employer-Sponsored Health Plans by Mercer, a subsidiary of Marsh McLennan, is part of the advisory firm’s services to help employers manage health insurance costs while seeking to improve employee health and well-being.
Sunit Patel, Mercer’s US Chief Actuary for Health and Benefits, said two factors are combining to send costs higher. “Health benefit cost trend has two primary components — healthcare price and utilization. Right now, both are rising.”
The survey projects that total health benefit costs per employee will increase by 6.5% in 2026, even with planned cost-reduction measures, the highest jump since 2010. If employers left current plans unchanged, the increase would approach an alarming 9%, underscoring the relentless pressure on employer healthcare budgets. This upcoming surge marks the fourth straight year of elevated health benefit cost growth, according to Mercer, breaking from a decade of more modest annual increases of about 3%.
Multiple drivers fueling cost surge
Some of the increases are due to advances in medical science. Advanced diagnostics and cutting-edge therapeutics, such as new cancer treatments and weight-loss medications, are transforming people’s lives and bodies but come at steep costs compared to previous therapies. Provider consolidation into large health systems has strengthened bargaining power to set higher reimbursement rates with insurers.
Patel said more people have been using various health services over the past two years, likely because of the lingering effect of delayed or missed care due to the pandemic and an easing in healthcare labor constraints. “The rise of virtual healthcare — and growing consumer acceptance of it, particularly in behavioral health — is also affecting utilization patterns,” Patel said, “because it removes geographic barriers to care and can be a more convenient option for patients.”
Inflation has also played a significant role, with increased wages across the healthcare sector feeding further cost increases. The pandemic accelerated virtual healthcare adoption, making it easier for people to seek care; paradoxically, this easy access has contributed to higher overall utilization, driving up aggregate claims.
A Mercer spokesperson said in a statement to Fortune that this is the first 15-year high seen since the survey began in 1987. Previous comparisons include a 13-year high in 2002 (14.7%, the highest since 18.6% in 1988) , and a seven-year high in 2010 (6.9%, the highest since 2002). “Cost growth was very volatile from 1987-2002, the early years of managed care, with sharp highs and lows,” the spokesperson said, adding that cost growth stabilized to about 6%-7% annually starting around 2004, before slowing in 2012 to around 3%-4% annually.
Employer responses: more cost-shifting
Facing these mounting pressures, employers are taking aggressive action. The survey found 59% of companies plan to make cost-cutting changes to health plans in 2026, up sharply from 48% in 2025 and 44% in 2024. The predominant strategy involves raising deductibles and cost-sharing provisions, resulting in higher out-of-pocket costs for employees when they access care. Yet, many employers are also seeking ways to curb costs without simply passing the burden onto workers. For example, there is increased emphasis on managing high-cost claims and measuring program performance to guarantee value.
At the same time, enhancing mental-health benefits remains a priority post-pandemic, with about two-thirds of large employers planning to make behavioral healthcare more accessible in the next few years. Mercer’s US Health and Benefits Leader, Ed Lehman, notes, “Employers recognize it’s essential for employee well-being and overall business performance.”
Your open enrollment this season
For workers, the bottom line is the expense: Paycheck deductions for health coverage are expected to climb 6% to 7% on average in 2026. This stems from the fact that employee premium shares typically rise in proportion to overall plan costs. In addition to higher premiums, increased deductibles and copays may further boost out-of-pocket expenses, forcing some employees to shoulder even greater financial strain.
Mercer said employees should “carefully weigh premium cost and cost-sharing provisions” during open enrollment, balancing premium costs with cost-sharing features to select the most appropriate plan for their needs. Mercer notes that more than a third of large employers will offer non-traditional, high-performance network plans in 2026—these options can help mitigate out-of-pocket costs by steering patients towards pre-selected providers known for quality and lower expenses.
[This report has been updated with a statement from a Mercer spokesperson.]
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
