Surging health costs bode ill for workers next year
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Aïda Amer / Axios
Health care inflation hit a three-year high last month, in the latest sign that workers could soon be juggling big premium increases with higher prices for groceries, clothing and other items subject to President Trump's tariffs.
Why it matters: Medical prices have been steadily rising, but corporations projecting increases of 9% or more next year are no longer willing to insulate their employees from the pain.
Driving the news: Medical care costs rose 4.2%, compared with an overall inflation rate of 2.9%, the Bureau of Labor Statistics said Thursday.
- The cost of doctors' visits increased 3.5%, and hospital and outpatient services rose 5.3%.
The big picture: Consulting firms are forecasting that the trend will carry over into next year, even without sector-specific tariffs on drugs.
- Mercer recently forecast that employers are facing their highest health benefit cost increase in 15 years. Beyond higher demand for health services, other factors include rising wages in the medical sector.
- On Wednesday, professional services firm Aon reported that U.S. employer health care costs are projected to rise 9.5% in 2026, or more than $17,000 per employee. It blamed rising prescription drug costs and higher health care utilization.
- "The overlooked reality is that employers continue to act as a stabilizing force," Farheen Dam, head of Health Solutions for North America at Aon, said in a statement. "They absorb the bulk of the increase while making smart, targeted adjustments that protect employees and preserve plan value."
Between the lines: The rising costs are being felt beyond workplace insurance; Affordable Care Act marketplace plans are seeking median 18% premium hikes for next year, according to KFF. That's the largest rate change insurers have requested since 2018, they said.
- The insurers cite high-priced drugs, increasing labor costs and general inflation, as well as concern about the expiration of enhanced subsidies that could hike out-of-pocket premiums an average of 75% for over 20 million enrollees.
The bottom line: Inflation is hitting health care harder than the broader economy, setting up a painful year ahead for both patients and employers.
- It's unclear whether the biggest health insurance price hikes in years could lead to deferred care, or more people opting to go uncovered.
