Employer-sponsored insurance (ESI) costs are on the rise — but they’re unpredictable. Since 2020, ESI costs have been fluctuating at staggering rates, and we expect increases of 9% to 10% in the next couple of years. Employers can no longer assume a 2% to 4% cost increase year over year.

The COVID-19 pandemic is the obvious reason for rising costs, along with the supply chain disruptions and labor shortages associated with it. However, there are four other new factors shifting the cost landscape in employer-sponsored insurance. 
 

1. Inflationary pressures are more prominent than ever. While they impact all stakeholders across healthcare, they are ultimately passed onto employers through cost increases.
2. Hospital consolidation is considered a large contributor to high healthcare costs by 94% of employers. As large health systems merge, employers have more limited options and less negotiating power.
3. High-cost claimants are rising, especially among younger plan members. The two biggest causes are cancer and prenatal/neonatal care costs.  
4. New innovative drugs are continuously driving up costs — particularly weight loss drugs and ultra-high-cost drugs. There’s a projected annual spend of $25.3B on gene therapies alone in 2026.