Our 2025 Best Practices in Healthcare Survey found that there’s a projected 9.1% increase in healthcare expenses for 2026. Some employers are already facing double-digit hikes. Many are questioning the sustainability of current benefits while trying to remain competitive in attracting and retaining talent.
The impact of high-cost claims
A small portion of members drive a large share of costs: 5% account for 56% of total spending, and just 1% are responsible for 28%. Claims once considered high-cost at $50,000 now often start at $100,000, with multimillion-dollar claims increasingly common, driven by advanced treatments like gene therapy or complex conditions such as congenital disorders and transplants.
Top drivers of high-cost claims
While some high-cost claims stem from sudden events like trauma or acute illness, they more often involve chronic, complex conditions requiring long term, expensive care. These include cancer, NICU stays, cardiovascular disease, sepsis and neurological or blood disorders. High-cost claims are also shifting demographically, with younger members affected due to neonatal care, genetic disorders and mental health.
Use data to drive strategy
Employers must analyze member and claims data to target high-impact areas. Key focus areas include:
- Demographics: Location, tenure and job role
- Comorbidities and social factors: Their impact on outcomes and costs
- Conditions: Preventable versus non-preventable, lifestyle-related
- Cost stratification: Claims over $50K, $100K, $500K and $1M+ medical versus pharmacy
- Out-of-network and leakage: Identify claims outside of contracted care
- Claim duration: Acute, long term, or recurring
- Population risk stratification: Predictive analytics to identify emerging high-risk groups
A strategic shift toward clinical solutions
Employers are moving beyond traditional tactics and adopting more targeted clinical strategies:
- Specialty medications: Focus on cost drivers like GLP-1s, and optimize formularies, biosimilar use, prior authorizations and vendor contracts
- Condition-specific programs: Mental health, weight management/diabetes and women’s health are most common, with growing attention to cancer, cardiovascular and gastrointestinal care
- Align care management to risk: Ensure third party administrators and clinical teams are aligned with cost drivers and population needs, with accountability for outcomes such as engagement, admissions and emergency visits
- Improve access and navigation: Expand telehealth and virtual care, reconsider onsite/near-site clinics and use behavioral economics to guide members to high-quality, cost-effective care
- Expand mental health support: Integrate employee assistance programs, expand virtual access, leverage centers of excellence and evaluate network adequacy
- Earlier risk identification and prevention: Use predictive analytics to flag rising-risk members early for proactive support, screenings and interventions
- Accountability and value-based care: Continuously assess program effectiveness, promote collaboration across providers and partners and adopt care models focused on outcomes, quality and patient experience
New challenges require new strategies
Addressing today’s cost pressures demands more than traditional approaches. While tools like plan design and stop loss remain important, sustainable impact now depends on clinically driven strategies. Employers must urgently implement short- and long-term solutions rooted in clinical effectiveness, collaboration and accountability.
