Taking command of health care costs
Understand the trends behind rising health care costs and the levers CFOs and their benefits teams can pull that may help move the needle.
In 2026, company CFOs are navigating an unprecedented period of cost pressure, driven by market and economic uncertainty, shifting trade policies and inflationary wage demands. Health benefits are a major cost driver, with medical spending projected to rise by another 8.5% this year.1 This increase — driven by rising medical service and drug prices — is likely the single largest expense increase employers will face in 2026.
When your CEO asks you and your benefits teams for solutions, you need to understand what's driving costs and which strategies can stabilize them without hurting talent acquisition or retention.
4 cost drivers dominating Profit and Loss (P&L) statements
1. GLP-1 and other specialty medications
Specialty medications drive around 55% of pharmacy spend.2 At the same time, employee demand for these costly specialty medications like GLP-1s is complicating coverage decisions. For instance, 73% of employees indicated that GLP-1 coverage is important in deciding whether to take or stay at a job,3 but two-thirds of large employers reported that covering GLP-1s for weight loss has significantly impacted their pharmacy spend.4
The side effects of these drugs drive some of this spending, too, since they often necessitate additional medical care. In fact, UnitedHealthcare data found that pharmacy spend increased 225% and medical spend increased 11%, on average, per member from the 12 months prior to starting a GLP-1 to the 12 months after starting a GLP-1.5 Additionally, employers are also wary of covering these drugs because more than half of members quit taking the medication within the first year,6 with many regaining weight and failing to achieve the long-term health benefits that would come from lower weight.
Strategies that can help control this spend: Implement stricter coverage criteria that requires prior authorization or participation in an adherence or lifestyle modification program — or consider eliminating coverage entirely while understanding the potential impacts this may have on talent recruitment and retention efforts. Employers may be more inclined to pursue this path as new legislation continues to work to make GLP-1s more accessible and affordable for consumers to purchase directly from manufacturers.
2. Chronic conditions
Chronic conditions remain one of the most persistent drivers of employer health care costs. Rising rates of diabetes, cardiovascular disease and other conditions are pushing up both utilization and per-member spending, while digestive disorders and behavioral health conditions have emerged as leading cost drivers with significantly increased utilization rates. Part of this can be attributed to advancements that have led to people being diagnosed with chronic conditions earlier in life that require ongoing management. In addition, treatments are growing increasingly expensive as new drugs and therapeutics become available. At the same time, many chronic conditions go unmanaged until they escalate into more serious and costly health events. That’s why, despite the potential long-term spend implications, early intervention remains critical to preventing catastrophic or high-cost claims from derailing your financial projections.
Strategies that can help manage this spend: Promote preventive care to enable earlier intervention and invest in specialized Centers of Excellence (COEs) and clinical programs that take a whole-person approach to managing these often complex and costly conditions. Offering access to programs like the Special Needs Initiative (SNI) and Complex Care Concierge (C3), which match eligible members and their families with a dedicated care advocate who provides personal support and acts as a single point of contact connected to all aspects of the health care system, can also help members get answers sooner and in a more cost-efficient manner.
Understanding which conditions are impacting your workforce more can help pinpoint opportunities to reduce spend while also providing employees with better support. Providing your benefits teams with the resources they need to deploy targeted employee communications can also help ensure employees are aware of and using the programs available to them that are designed to more effectively manage their diagnosis.
3. Catastrophic claims
High-cost claims are adding unpredictability to employer benefits budgets. Claims of $100K or more have increased 12.9% from 2024-2025, according to the UnitedHealthcare 2026 Health Trends Report.7 What makes these claims especially difficult to plan for: About half of employees with catastrophic claims had no previous indicators.8 While cancer remains the leading driver of these claims, younger workers are increasingly driving these claims, with individuals aged 20 to 40 now accounting for 10% of high-cost claimants.9 Given the growing prevalence and unpredictability of these million-dollar gene therapy claims, specialized stop loss protection has become essential for safeguarding employer budgets against these extraordinary costs.
Strategies to help prepare for the unpredictability of these costs: Explore stop loss options to help protect from significant financial losses and COEs that can provide more specialized support and potentially prevent more serious health events from occurring unexpectedly.
4. AI impact on coding practices
Recent trends reveal a concerning pattern of upcoding that is contributing to inflated health care costs. The proliferation of AI-powered clinical documentation tools used by providers is accelerating this trend, as these systems can automatically suggest higher-level billing codes, leading to services being systematically coded at elevated levels regardless of actual care provided.10 With inpatient hospital costs rising and outpatient hospital costs climbing annually, even modest upcoding across large employee populations translates to millions in unnecessary spend.
Strategies to help curb coding inaccuracies: This highlights the importance of choosing a carrier that has sophisticated payment integrity programs in place to identify these patterns, challenge inappropriate billing and ensure employers and employees aren't overpaying for the care they receive. For instance, $6.8B in employer savings are generated by UnitedHealthcare Payment Integrity solutions, which work to prevent overcharges and overpayments.11
The mistake many CFOs can make when under cost pressure is overreacting with broad-brush cuts that trigger talent attrition, productivity losses and higher costs down the line. Instead, you may want to ask yourself:
- Which costs are market-driven and unavoidable? (i.e., underlying medical inflation, new high-cost therapies entering the market)
- How much can our costs be reduced through strategic adjustments to plan design and more effective utilization management? (i.e., stricter coverage criteria or prior authorization requirements, care management programs, copay-only plans like Surest®, COEs, care navigation strategies, targeted communications)
- What’s the cost of doing nothing versus the cost of intervention?
- How is our carrier working to make health care more affordable? (i.e., care management strategies, reducing unnecessary or wasteful spending, advocacy efforts on behalf of members and clients)
Top CFOs can distinguish between necessary investments — the value of early intervention and programs with proven ROIs — and avoidable waste — overutilization, overcharges and preventable escalation. Teaming up with a carrier that has the insights and know-how to make a difference on your bottom line is foundational to long-term organizational stability and financial success.
For those that work with UnitedHealthcare, the value is clear — and proven:
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