Home›Insurance›Health Insurance›Employers respond to medical, pharmacy cost pressures…

Employers respond to medical, pharmacy cost pressures with tighter benefits oversight

Gallagher’s survey found 36% of employers saw health premium increases of 10% or more at their latest renewal, while 78% expect higher health care costs in 2026.

Reported · Written up by our desk · Health Insurance

Employers are tightening oversight of employee benefits as medical and pharmacy spending pressures mount, according to Gallagher’s U.S. Benefits Strategy and Benchmarking Survey, cited by Risk & Insurance.

Gallagher found that 36% of employers reported health plan premium increases of 10% or more at their most recent renewal, and only 50% said their organization effectively manages health care costs. The survey pointed to rising challenges in controlling medical services costs, with 73% of employers naming it a top concern, followed by the cost of specialty drugs at 49% and non-specialty prescription drugs at 39%.

To address these pressures, 45% of employers now self-insure the medical plan with the highest enrollment, up 3 percentage points from 2025, with the share rising to 86% among large employers with 1,000 or more full-time employees. Looking ahead, 78% of employers anticipate higher health care costs in 2026, including 65% expecting costs somewhat higher and 13% expecting them significantly higher.

Gallagher said rising pharmacy spend, driven largely by specialty drugs and GLP-1 medications, is pushing employers toward more active management of pharmacy benefit managers. The report also found that just 20% of employers conduct regular PBM requests for proposals at least once every three years, while the figure increases to 50% among large employers, and referenced recent Federal Trade Commission enforcement actions aimed at PBM pricing practices.

More like this

Sources