Health insurance provided by U.S. employers is projected to see a significant jump in costs in 2026, with employees expected to shoulder an average 6.5% increase in premiums, according to a new report by the consulting firm Mercer.
This would mark the steepest annual rise since 2010, and the fourth consecutive year of substantial increases, following a decade where yearly growth rarely exceeded 3%.
Why Are Costs Rising?
Experts attribute this surge to several factors:
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Higher healthcare service costs and increased demand.
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Rising prices of specialized medications, including new treatments for diabetes and obesity such as GLP-1 drugs.
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Accelerated healthcare industry consolidations, giving providers greater bargaining power to demand higher reimbursements.
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Increased labor costs in the post-pandemic era.
Daniel Polsky, professor of health policy and economics at Johns Hopkins University, noted that part of the spike is tied to “pent-up demand” for medical care after COVID-19, as many Americans postponed treatment during the pandemic years.
Impact on Families
Mercer’s data shows that if employers take no action, premiums could rise by up to 9%, while interventions may keep increases between 6% and 7%.
Professor Christopher Whaley of Brown University warned:“Many households will struggle to absorb these costs without cutting back on other expenses.” Some employees may even drop coverage entirely, while others may switch to lower-cost, lower-coverage plans.
Jonathan Gruber, a professor at MIT, added that this comes at a time when alternative safety nets such as Medicaid and the Affordable Care Act (Obamacare) face reductions, which could increase the number of uninsured Americans.
Employer Strategies
The survey revealed that 59% of employers plan to make changes to their health insurance plans in 2026 to offset rising costs, compared with 48% in 2025 and 44% in 2024. Top strategies include:
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Managing high-cost claims.
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Evaluating health program performance to ensure value.
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Expanding mental health and behavioral health services, with nearly two-thirds of large employers (over 500 employees) prioritizing this due to growing workplace stress.
What Lies Ahead
Some experts hope 2026 will be a “one-off year” as delayed care normalizes. Others fear rising costs may become the “new normal” given persistent drivers of inflation in healthcare.
For now, attention remains on how employers and policymakers respond. Calls are growing for stronger regulation, tighter control of drug pricing, and more sustainable healthcare models to ensure that coverage doesn’t become an unbearable burden for millions of American families.