Health care costs are rising fast — and workers are headed for a tougher year ahead. Here’s a breakdown of what’s happening, why it matters, and what to watch out for.
The Current Picture
- Medical care inflation has surged to its highest point in three years.
- Prices for doctors’ visits are up about 3.5%, while hospital and outpatient services have increased around 5.3%.
- Overall inflation is running lower (about 2.9%), which means health care costs are rising more steeply than most other expenses.
Why Costs Are Climbing
Several forces are driving the rise in health expenses:
- Increased Demand & Use of Services
More people are using health services, both for routine care and more intensive needs. - Higher Wages in Health Care
Labor costs in hospitals, clinics, and other health settings are going up — part of that is general inflation, part of competition for skilled workers. - Prescription Drugs & Specialty Medications
Costs for newer, high-price drugs are pushing employer health costs upward. - Insurer Pressure & Premium Adjustments
With rising underlying costs, insurers are requesting substantial premium hikes, especially under plans bought through marketplaces. - Expiring Subsidies
Some of the support systems that helped keep costs down are ending. For people relying on subsidies, this could mean much larger out-of-pocket costs.
What This Means for Employers & Workers
- Employers are projecting health benefit cost increases of around 9.5% in 2026, putting per-employee costs north of $17,000.
- Even when employers try to shield their workforce, they are increasingly unable to fully absorb the rising costs without affecting premiums, deductibles, or cost-sharing.
- Workers could end up with significantly higher health insurance premiums and out-of-pocket expenses.
What to Watch & Potential Responses
- Employers may adjust plan design: higher deductibles, more cost sharing, or altering provider networks.
- Advocates and policy makers may push for renewed subsidies or legislative action to limit drug costs or regulate insurer rate increases.
- Individuals should review their health plans, anticipate higher costs, and budget for possible increases in premiums or medical expenses.