In 2025, employer-sponsored health care experienced the highest pricing increase in a decade – and the trend is expected to continue in 2026.
Nationally, there are several factors driving up health care costs:
- Hospital consolidation: When hospitals merge, prices go up. A study from the National Institutes of Health found that hospitals that are the sole provider in their local markets have prices that are 12.5 percent higher than hospitals where there’s more competition. And the number of hospital mergers across the country has continued to rise each year since 2022.
- Prescription drugs: The use of expensive specialty drugs (such as GLP-1 medications and gene therapy products) is rising, which is driving up pricing. Tariffs also are expected to impact pricing of imported drugs, and several health insurance companies have announced higher-than-usual rate increases in anticipation of the added expense.
- Health care worker costs: By 2028, the United States is expected to have a critical health care worker shortage of 100,000 people, according to the American Hospital Association. Already, labor costs account for nearly 60 percent of all hospital spending, as wages have increased substantially in an attempt to recruit and retain workers.
- Chronic conditions: Treating chronic disease and conditions – conditions that lasts a long time and require routine medical care – is expensive, and the number of people in the United States with chronic conditions continues to rise. A recent study from the Centers for Disease Control and Prevention found that nearly 60 percent of young adults, 78 percent of mid-life adults, and 93 percent of older adults had at least one chronic condition. For employers, close to 30 percent of their total average health care spending goes toward treatments and medications to help manage these diseases and conditions. And as the workforce ages, these costs are expected to rise.
If you’d to discuss trends in benefits pricing further, you can reach out to our employee benefits team here, or you can contact your Schauer Group advisor.
