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Rising Healthcare Costs Push Employers Toward Better Benefits Oversight

The latest findings from Gallagher's 2026 US Workforce Trends Report highlight a significant shift in how employers are managing benefits amid escalating healthcare costs. As healthcare expenditures climb due to numerous factors, American employers are adopting more strategic approaches to benefits oversight, aiming to balance affordability with employee needs.

According to the report, which surveyed over 3,700 US organizations, a staggering 36% of employers faced health plan premium hikes of 10% or more during their most recent renewal despite implementing adjustments to their healthcare plans. In addition to premium increases, issues such as unpredictable claims and the surging prices of medical services—especially hospital care—continue to compound difficulties for businesses trying to contain costs. This environment has prompted many organizations to seek out proactive solutions, such as refining funding strategies and monitoring vendor performance in order to enhance overall outcomes.

John Tournet, CEO of Gallagher’s Benefits HR Consulting Division, observed that the growing financial pressures, coupled with uncertain forecasts, have compelled employers to rethink their traditional cost-containment tactics. Rather than merely reacting to rising costs with sporadic plan revisions, many are now relying on robust data analytics and enhanced oversight strategies to better evaluate the effectiveness of their healthcare benefits. In line with this trend, interest in AI-enabled tools is on the rise, equipping employers to identify emerging risks and trends that may affect their benefit investments in the future.

One of the most scrutinized areas of healthcare spending is pharmacy benefits. Almost half of the surveyed employers cited the escalation of specialty drug costs, especially the growing prevalence of high-cost medications like GLP-1 drugs, as a primary concern. To manage these expenses, organizations are not merely shifting costs onto employees; instead, they are pursuing greater transparency in their relationships with pharmacy benefit managers (PBMs), conducting thorough pricing reviews, and implementing targeted usage management initiatives.

In the quest to augment workforce support without significantly inflating costs, voluntary benefits are increasingly featured in total rewards strategies. Employers now frequently cite the enhancements in benefits packages (72%), the mitigation of coverage gaps (66%), and strengthening financial security for employees (49%) as major justifications for employing voluntary benefits. Additionally, there is a rising interest in supplemental offerings such as employee perks or discount programs (51%), identity theft protection (42%), and pet insurance (36%). This diversification in benefit offerings reflects a more comprehensive focus on employee financial and lifestyle support, enabling employers to better leverage digital resources to guide their employees through these options.

Despite the expanding range of benefits available, participation remains a crucial indicator of program success. Alarmingly, 23% of employers reported that fewer than 20% of eligible employees engage in wellbeing initiatives. This insight has catalyzed a shift from standalone benefits programs toward more integrated management approaches that link health and financial wellbeing with employees' everyday experiences. Employers are prioritizing efforts to make benefits easier to access and understand year-round, beyond the traditional enrollment periods.

In Tournet's view, the role of technology is transforming not only how employers administer benefits but also how employees engage with them. Enhancing communication, simplifying access, and utilizing digital tools to provide pertinent guidance are critical to empowering employees to make informed decisions, ultimately optimizing their overall benefits experiences.

The emerging theme across all benefit management strategies is a move away from merely adding new offerings. Instead, a notable focus is being placed on executing existing programs with greater precision. Reflecting this change, over a third (37%) of employers now incorporate analytics to guide workforce planning and decision-making, underscoring data's rising significance in benefits management.

In this environment of rising healthcare costs and intensifying complexities, employers are increasingly recognizing the importance of managing, evaluating, and optimizing their benefit investments effectively. A data-driven mindset is playing a pivotal role in assessing outcomes and delivering meaningful value for both the employers and their workforce.

About the Report

The 2026 US Workforce Trends Report by Gallagher is based on survey responses from 3,717 organizations collected between January and March 2026. It provides crucial benchmarking data and insights that cover aspects of medical, pharmacy, and voluntary benefits, as well as wellbeing initiatives and absence management.

About Gallagher

Arthur J. Gallagher & Co. (NYSE: AJG), based in Rolling Meadows, Illinois, is a prominent global brokerage, risk management, and consulting services firm. Gallagher extends its services across approximately 130 countries through both its owned operations and a vast network of correspondent brokers and consultants.