Employers in the U.S. are facing the steepest health care cost spike in 15 years – with a wave of actuarial reports predicting an average 9 to 9.5 percent jump next year. This trend is starting to feel inevitable for many employers, and several factors are making it more severe for 2026. Demand for innovative (yet expensive) medications, such as GLP-1 drugs for weight loss and specialty drugs in cancer therapy, is soaring. Hospital and provider prices continue to climb, and health care inflation is accelerating. Utilization is up, too, as more working-age Americans seek care for chronic conditions.
And the pain doesn’t stop at the company ledger. For the first time ever, the average employee’s share of health care costs – including premiums, deductibles, copays, and other out-of-pocket expenses – could surpass $5,000 next year. That’s the equivalent to five months of groceries for the typical American family. This cycle is not sustainable.
Employers have largely absorbed these costs and considered passing them off to employees as a last resort. This year, many are signaling a shift: higher paycheck deductions, increased cost-sharing, and reduced benefits are on the horizon for millions of American workers. This is compounded by an already complex labor environment, where many businesses are facing difficulties in filling jobs or retaining talent.
However, cost increases without commensurate improvements to quality or access cannot be accepted by employers as the norm. Employers do have options and can mitigate these costs while prioritizing higher quality care for employees.
Take JPMorganChase. The firm invests nearly $3 billion annually in health care for approximately 285,000 employees and families. Even with this scale and reach, we anticipate a 10% increase in costs for 2026. To help manage these expenses, the company is focused on connecting employees with primary care and preventive screenings, aiming to reduce emergency room visits, curb chronic disease, and achieve long-term savings. Because this longer-term approach may not be realistic for every business, especially those feeling the immediate squeeze of rising health care costs, there are a range of other options.
Consider smaller businesses, which employ 45-50% of the private-sector workforce and are so critical to the U.S. economy. For them, the health care cost trend presents far more than a budget issue. With less bargaining power and fewer options, smaller employers are especially vulnerable to these surges. What’s more, an increasing number of small business leaders report that the ability to offer affordable, quality health benefits is core to their culture and ability to grow and compete with larger counterparts.
These businesses require health care choices that offer immediate flexibility and stabilize costs. Alternative health plan design can address that need – and offer near-term results. For example, Morgan Health portfolio company Centivo offers employees access to a curated, narrower network backed by high-performing providers (thereby controlling costs for employers). Venteur, another Morgan Health portfolio company, allows employers to set a health care contribution through an ICHRA, or individual coverage health reimbursement arrangement, that fits their budget, rather than leaving them to absorb cost increases year after year.
The typical small business leader is responsible for product, compliance and people management and typically doesn’t have a dedicated benefits team. We also hear that they often don’t know how to navigate health care and need more tailored support in researching and vetting new innovations, like ICHRAs. Recognizing this gap, Morgan Health created the Small Business Health Care Hub in collaboration with Chase for Business, which serves 7 million small businesses nationwide. Our goal is to help small and mid-sized businesses demystify health insurance and empower them to confidently understand their options.
Now, more than ever, it’s critical for business leaders to understand their options. Don’t simply default to cost-shifting or benefit reductions. Explore innovative plan designs, scrutinize vendor contracts, and seek out solutions that balance affordability with quality care. Our health care choices shape the well-being and financial security of the American workforce and the next generation.