Employers look to shift healthcare costs amid financial pressures

For the survey, which was conducted between April 8 and April 25, analysts at Mercer spoke to 711 employers about their health and benefit strategies for next year. Among the respondents, 504 had 500 or more employees.

According to Mercer, employers' annual healthcare cost increases typically averaged around 3% before seeing a sustained increase starting in 2023. In 2023, total health benefit cost per employee grew by over 5% and remained elevated in 2024 at 4.5%. This trend is expected to continue in 2025, with an estimated average increase of 5.8%. Without any cost-reduction measures, employers could see an 8% increase in healthcare costs.

Overall, 51% of employers said they are either likely or very likely to shift costs to employees in their 2026 health plans, an increase from 45% who said the same for 2025. 

Prescription drug costs are also straining employers

Prescription drug costs are also on the rise, having increased by 8% in 2024. This increase was largely driven by specialty pharmacy products and continued use of GLP-1 drugs.

According to the survey, 77% of employers said managing the cost of GLP-1 drugs is very/extremely important while 57% said the same about managing costs for cell and gene therapies.

Over half of employers (58%) also said it is very/extremely important to evaluate new approaches to contracting for pharmacy benefits. This could include a new arrangement with their current pharmacy benefit manager (PBM), switching to a different PBM, or moving to other models, such as unbundling.

Currently, around a third of employers say that they are looking at new and emerging PBMs, and a similar number said they are requiring their PBM to disclose all enterprise revenue, including rebates, specialty, mail-order pharmacy, and more. In addition, 40% said they are considering alternative contracting models offered by major PBMs, and 10% said they are considering taking a modular approach rather than a traditional contract with one PBM. 

"There is an increased focus on plan sponsor fiduciary responsibility and growing concern about a historical lack of transparency in PBM contracts," Mercer wrote. "Without greater transparency, it may be more difficult for sponsors to demonstrate they are meeting fiduciary obligations, and the lack of price information also presents barriers for plan sponsors seeking to play an active role in managing pharmacy benefit costs."