Mercer's National Survey of Employer-Sponsored Health Plans projects total health benefit cost per employee rising 6.5% in 2026, the steepest increase since 2010 and enough to push per-employee cost above $18,500. Without employer cost-reduction measures the increase would have been roughly 9%. The gap between those two figures is the whole story, and it is closing for reasons employers do not control.
Key Takeaways
- 6.5% projected for 2026 after employer intervention, against roughly 9% without it, on responses from over 1,700 employers in a survey weighted to represent all US sponsors with 50 or more employees.
- 8.5% to 9.5% underlying medical trend across survey methodologies, a fourth consecutive elevated year after a decade averaging about 3%.
- GLP-1 spending rose more than 500% between 2018 and 2023, from $13.7 billion to $71.7 billion, and is projected at 14% of all prescription drug spend in 2026.
- Claims above $1 million rose 29% in 2024 and claims above $3 million rose 47%, against a median specific stop-loss deductible of $250,000 for employers with 500 to 4,999 employees.
- 1% of members account for up to 35% of total spend, and they exhaust any deductible within a single episode.
Reconciling the Survey Spread
Mercer's survey, now in its 40th year, covered 2,010 employers, with preliminary findings from over 1,700 responses collected between June and August 2025.
| Survey / Source | Projected 2026 Trend | Sample / Coverage |
|---|---|---|
| Mercer National Survey | 6.5% (after mitigation); ~9% underlying | 2,010 employers |
| Aon Health Value Initiative | 9.5% | 1,000+ employers, 7.7M employees, $120B spend |
| PwC Health Research Institute | 8.5% (Group), 7.5% (Individual) | 24 health plans, 125M+ group members |
| WTW Global Medical Trends | 9.6% (U.S.) | Global insurer survey |
| Business Group on Health | 9.0% gross; 7.6% after plan changes | 121 employers, ~7.4M covered lives |
| Segal Health Plan Cost Trend | 9.0% median (medical) | 80%+ commercially insured market |
| Int’l Foundation of Employee Benefit Plans | 10.0% | Employer survey |
The 6.5% to 10.0% range narrows once methodology is accounted for. Mercer's figure is net of plan design changes; Aon's 9.5% and PwC's 8.5% measure underlying trend before employer intervention; the Segal and IFEBP numbers are employer expectations, which run above actuarially adjusted projections.
Reconciled, the surveys agree on an underlying trend of 8.5% to 9.5%, a fourth consecutive elevated year after roughly a decade averaging about 3%. That decade calibrated renewal projections, reserves, and OPEB valuations to a 3% to 5% baseline. The common OPEB assumption that trend grades down to 4% or 5% within three to five years is now four years into contradicting evidence.
Two Components Rising at Once
Sunit Patel, Mercer's US Chief Actuary for Health and Benefits, named the mechanism: cost trend has a price component and a utilization component, and both are rising.
Through most of the 2014 to 2022 period they partly offset, so modelling the two semi-independently and absorbing the cross-product into margin was defensible.
At current levels it is not. A 5% price increase combined with a 4% utilization increase produces 9.2%, not 9%. The interaction term adds 20 to 40 basis points, which was negligible when both components ran at 1% to 2% and is not when they run at 4% to 5%. On a mid-size employer's renewal that difference is measured in hundreds of thousands of dollars, and an additive trend model gives it away by construction.
The pharmacy line has a separate problem, which is credibility rather than structure. GLP-1 spending rose more than 500% between 2018 and 2023, from $13.7 billion to $71.7 billion, and the class is projected at 14% of all prescription drug spend in 2026. 49% of large employers now cover GLP-1s for weight management, up from 44%. Large-employer prescription drug spending rose 9.4% in 2025, with pharmacy trend running 2.5 percentage points above medical.
A trend factor fitted to 2018 through 2022 pharmacy experience cannot see any of that, because those years sit before the inflection. GLP-1 utilization is still on the steep part of an adoption curve, so the right treatment is to isolate it at the NDC level and model it on adoption-curve parameters rather than extrapolate through a regime change.
Where that lands is the stop-loss attachment point. Sun Life reported claims above $1 million up 29% in 2024 and claims above $3 million up 47%, against a median specific deductible of $250,000 for employers with 500 to 4,999 employees and $725,000 for those with 10,000 or more. A $250,000 specific that was adequate in 2023 is being tested by a claim distribution that moved underneath it.
The Lever Employers Are Pulling Does Not Reach the Cost
Employer response has escalated sharply. Plan design changes went from 44% of employers in 2024 to 48% in 2025 and a projected 59% in 2026, concentrated in higher deductibles, tighter networks, and utilization management. Among large employers, 51% say they are likely to shift costs to employees.
The deductible frontier is already high. Mercer puts the average individual deductible at $1,064 on a large-employer PPO and $2,481 on an HSA-eligible plan, while KFF's 2025 survey reports an all-plan average of $1,886, rising to $2,631 at firms under 200 workers.
The problem is who generates the spend. Mercer's own data has 1% of members accounting for up to 35% of total healthcare spend, and those are catastrophic claims and specialty drug episodes that exceed any deductible and any out-of-pocket maximum inside a single event. Moving an individual deductible from $1,500 to $2,000 changes nothing for a member on a $1 million claim.
That decoupling makes the historical elasticity assumption unsafe. Between 2014 and 2019, deductible increases of $250 to $500 reliably produced one to two points of trend mitigation, because the marginal claimant was discretionary. When the marginal dollar comes from oncology, behavioral health, and GLP-1 utilization, cost-sharing is aimed at a population that is not the cost.
The measures that would reach the driver sit outside the employer's control. Biosimilars are the deflator health plan actuaries rank first, with Humira biosimilars alone saving an estimated $2 billion to $3 billion annually since their 2023 launch and further oncology entries expected through 2027 that could compress specialty trend by one to two points. GLP-1 net pricing may moderate through value-based contracting or reference pricing. Both depend on manufacturer and regulatory decisions, which leaves the 59% of employers changing their plans working the one lever they hold, and the smaller one.
Further Reading
- Provider AI Revenue Tools and the Structural Inflators Behind PwC's 9% Medical Cost Trend for 2027 - Mechanistic analysis of how provider AI revenue optimization tools work at the billing layer, how hospital market concentration amplifies their effect, and what IBNR completion factor recalibration is needed for AI-accelerated claim submission velocity.
- Healthcare Cost Trends 2026: Forces Reshaping Medical Spending - Comprehensive analysis of the 8.5% to 9.5% medical cost trend consensus across six major surveys, with detailed breakdowns of GLP-1 drug costs, behavioral health surges, and oncology spending for actuarial pricing and reserving.
- GLP-1 Drug Trend Factor Framework for Group Health Pricing - How to isolate GLP-1 from base pharmacy trend using NDC-level filtering, project utilization with logistic S-curves, and stress-test stop-loss attachment points under multiple adoption scenarios.
- Stop-Loss Carriers Tighten GLP-1 Rules Ahead of 2026 Renewals - Carrier-by-carrier breakdown of the GLP-1 exclusions, sublimits, and prior authorization requirements reshaping the stop-loss market for self-funded employers.
- Stop-Loss Pricing Responds to Million-Dollar Claims Surge - How the spike in catastrophic medical claims is reshaping specific deductible levels, aggregate corridor factors, and renewal pricing for self-funded employer plans.
- ACA Benchmark Premiums Surge 21% in 2026 - The individual market cost acceleration that serves as a leading indicator for the medical trend pressures flowing into employer-sponsored coverage.
- Health Plan Prior Authorization Metrics Now Public Under CMS-0057-F - How newly disclosed denial rates and processing times will reshape utilization management strategies and feed into the administrative cost dynamics underlying employer health plan pricing.
- Medicaid Six-Month Redeterminations and the Managed Care Pricing Fallout - How OBBBA's accelerated Medicaid churn will push disenrolled workers into employer-sponsored coverage with deferred care needs, adding incremental cost pressure to group health plans.
- Federal PBM Reform Mandates Full Rebate Passthrough by 2029 - The ERISA enforcement architecture and NAIC examination framework that will reshape pharmacy cost assumptions in employer health plan pricing by January 2029.