The 2026 Health Plan Reality: Employers Cannot Cost-Shift Their Way Out of the Problem

Increasing deductibles or employee contributions may reduce the employer’s immediate share of the renewal, but it does not change the underlying cost of care. It does not lower the price of an infusion, improve a pharmacy contract, prevent an unnecessary surgery or make a hospital charge more reasonable. In many cases, it simply transfers more of the cost to employees who are already struggling to afford healthcare.

That approach can also create unintended consequences. When employees face higher deductibles and out-of-pocket costs, they do not always eliminate unnecessary care. They may delay prescriptions, preventive screenings, diagnostic testing or follow-up treatment because they cannot afford their portion of the bill. That can lead to more serious health issues and higher claims later.

Employers need a more complete strategy. The real opportunity is not simply redesigning the plan every year to make employees pay more. It is identifying the areas driving cost and actively managing them.

Pharmacy should be one of the first places employers look. Prescription drug spending continues to grow faster than most other components of the health plan, yet many employers still have very little understanding of how their PBM contract works. They may know the rebate guarantee, but not the true net cost of the drugs being purchased. They may not know whether spread pricing is allowed, how specialty medications are priced, how formulary decisions are made or whether all manufacturer revenue is being returned to the plan.

A strong pharmacy strategy requires employers to look beyond headline rebate numbers. The focus should be on net cost, specialty drug management, biosimilars, formulary performance, contract transparency and the actual financial incentives built into the PBM relationship. A PBM can meet every contractual guarantee and still be far more expensive than another arrangement.

Site-of-care management is another major opportunity. The same treatment can cost dramatically more depending on where it is delivered. Infusions, imaging, specialty drugs, surgeries and diagnostic services are often performed in hospital settings when a physician’s office, independent facility, ambulatory surgery center or home-based option may be available.

Employers should not expect employees to solve this problem by shopping on a price-transparency website. Most employees do not have the experience, information or clinical knowledge to evaluate complex care decisions on their own. Effective site-of-care management requires identifying high-cost services before they happen, reaching the employee at the right time and helping coordinate a lower-cost, high-quality alternative.

Cancer should also be treated as a defined health plan strategy rather than simply another category on a claims report. Cancer remains one of the most significant drivers of employer healthcare spending, but many plans still rely almost entirely on the carrier, TPA or provider system to manage the case.

Employers should understand how cancer care is being coordinated, whether expert second opinions are available, where infused medications are being administered, how specialty drugs are managed and whether employees have access to high-quality providers or Centers of Excellence when appropriate. Cancer is complex, emotional and expensive. Employees should not be expected to navigate it alone, and employers should not assume that every vendor involved is working together.

Vendor accountability also needs to become a larger part of the conversation. Many employers have added telehealth programs, navigation solutions, wellness tools, disease-management vendors, advocacy services and other point solutions over the years. Each may have sounded valuable at the time, but more vendors do not automatically create a better-performing plan.

Every vendor should have a clear purpose, measurable objectives and a regular performance review. Employers should know how many employees are meaningfully using the service, whether the vendor is reaching the right members and whether the reported savings can be independently verified. A vendor that produces activity reports but cannot demonstrate measurable value should not remain in the plan simply because it has been there for several years.

High-cost claimant oversight is equally important. In most health plans, a relatively small number of members account for a large percentage of total claims. Employers do not need personally identifiable medical information to manage this responsibly, but they do need timely reporting and an effective process for reviewing emerging risks.

That means looking closely at large ongoing claims, specialty drug utilization, cancer treatment, dialysis, transplants, complex maternity cases, musculoskeletal procedures and other high-cost conditions. Employers should also understand what the TPA, carrier, stop-loss provider and clinical vendors are doing to coordinate care and evaluate alternatives.

Reviewing a large claimant six months after the claims have been paid is not really management. It is accounting. The goal should be to identify high-cost cases early enough for the plan’s vendors to take meaningful action.

Alternative funding can provide employers with more transparency and control, but it should not be viewed as a solution by itself. Level funding, self-funding and group captives can all be effective when properly structured, but changing how the plan is funded does not automatically change what healthcare costs.

A poorly managed self-funded plan can perform just as badly as a poorly managed fully insured plan. The difference is that the employer experiences the financial consequences more directly. Alternative funding works best when it supports a broader strategy that includes better data, stronger contracts, active vendor management and ongoing claims oversight.

The same is true for narrow networks and stronger utilization management. A well-designed narrow network can improve quality and reduce costs by directing employees to more efficient providers. A poorly designed network may create disruption without delivering meaningful value. Prior authorization and clinical review can also help reduce unnecessary care, but those programs should be measured by whether they improve outcomes and help employees reach appropriate alternatives—not simply by the number of services denied.

The traditional renewal question has always been, “How much more will the employer and employees have to pay next year?” Employers should be asking a different question: “What changes will reduce the underlying cost and improve the performance of the plan over the next three years?”

There may still be years when employee contributions, deductibles or copays need to increase. But those changes should be part of a broader strategy, not the entire strategy.

The employers that perform best over the next several years will not necessarily be the ones with the highest deductibles or the narrowest networks. They will be the employers that understand where their money is going, hold vendors accountable and actively manage the areas creating the greatest financial and clinical risk.

Simply asking employees to pay more will not solve the problem. Employers need stronger pharmacy contracting, better site-of-care management, a defined cancer strategy, meaningful vendor accountability and earlier oversight of high-cost claims.

The real opportunity is not to shift more of the cost. It is to purchase and manage healthcare more effectively.