Health-Cost Sticker Shock: Is There a Cure?

The numbers are in for next year’s corporate healthcare costs, and they’re unusually tough, even amid a decade of particularly tough healthcare math. Indeed, employers expect to see a 9% jump in healthcare costs in 2026, according to figures from the Business Group on Health. The organization’s CEO called the data “perhaps more daunting and sobering” than it’s ever been before. Companies expect to use shifts in health-plan designs to lower the cost spike to 7.6%.

But the surge has corporate leaders throwing up their hands, with many feeling that their firm’s annual health-plan headache is turning into a chronic migraine. Ongoing cost swells, year after year, put the sustainability of corporate health benefits at risk. “It’s a challenge that’s not going away, and that’s the problem,” says Greg Button, president of global healthcare services at Korn Ferry.

To be sure, healthcare costs have long been on an upward trajectory. But from 2014 to 2020, average increases held steady at 5% to 6% per year, a rate that executives found challenging, but consistent. This year’s jumps come close to doubling those numbers—and companies have a recent track record of underestimating healthcare costs, having done so in three of the last four years for which there is full data (2021, 2023, and 2024). Which is to say that the 2026 healthcare budget costs could get even worse.

The question is what to do about it. Conversations about healthcare spending invariably include mention of GLP-1 medications, such as Ozempic and Mounjaro, which are driving a substantial portion of the cost increase. The clinical conditions that GLP-1 medications support are expected to expand, and already include common ailments like sleep apnea. “We feel that this is going to become even more significant financially,” says Steve Kapper, head of the National Health and Welfare Benefits practice at Korn Ferry. He suggests a focused approach to these medications that calls for prior authorization as well as the supplementing of GLP-1’s benefits through evidence-based well-being programs that provide lifestyle-change support.

The other obvious corporate response is to ask employees to cover a larger portion of their own rising costs. “This is not a popular thing to do, but it is something that employers are definitely doing,” says Button. A new option is alternative health plans, which are being trialed at some firms. The plans are more à la carte: Employees can pick and choose the services they want and don’t want, and are given a stipend to help pay for them. On the other hand, some companies regard swallowing the high healthcare costs as a retention opportunity; they’re left to look for inefficiencies elsewhere in the organization to cover the expenses. “It’s a tool that attracts and retains people,” says Button,.

Some firms are looking for cutbacks in other areas, like staffing and AI spending. David Vied, global sector leader for medical devices and diagnostics at Korn Ferry, says many companies have returned to the question of whether or not a brick-and-mortar footprint is essential. “From a corporate perspective, the question is whether they physically need the facilities they have,” he says. Whatever strategies companies adopt, experts advise clearly explaining them to employees, who are already well aware that healthcare is expensive. Vied encourages leaders to be transparent and authentic. “The only way to do it is to communicate exactly what’s being spent.”

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