Employer health plan costs are expected to increase by 10.9 percent worldwide, with over half of countries anticipating double-digit growth. This is according to a new report by Lockton, an insurance brokerage. Chronic disease, pharmacy costs, and labor shortages are driving these trends, according to Lockton.
The report summarized that chronic conditions — including cardiovascular disease, cancer, diabetes, and musculoskeletal disorders — remain the top contributors to medical claims worldwide. Lockton stated that pharmacy costs and the increased use of GLP-1 medications are becoming significant cost drivers in markets where these drugs are covered by the plan.
Furthermore, utilization is increasing because of the rising disease burden and greater employee focus on health. Poor plan usage and weak care management models are further worsening cost pressures, according to the report, with the overutilization of high-cost providers — such as emergency services for non-urgent conditions and reimbursement instead of in-network or empaneled providers — and the underuse of preventive care services.
General inflation is expected to decrease worldwide in 2026, Lockton noted, but it still affects emerging and politically unstable markets. Healthcare labor market pressures, especially for skilled nursing, are increasing provider costs amid historically low unemployment rates.
Overburdened public health systems are driving a shift to private care, the study found, boosting demand and raising costs for employer-sponsored plans, especially in areas with unregulated private medical fees and little provider competition.
Employers are responding with various cost containment strategies, Lockton summarized. The most common measures include negotiating with insurers through brokers, making minor plan design adjustments, and improving member education to enhance plan utilization.
Market trends that support better cost management include digitalization and technology integration, such as telemedicine, e-claims, and AI within the healthcare ecosystem, along with regulatory and structural reforms. Initiatives like copayments and limits on outpatient care and therapies, improved utilization management, cross-border and alternative care models, preventive and wellness programs, market competition and consolidation, and the adoption of biosimilars are also key. Together, these strategies aim to reduce chronic disease rates, address technology-related cost pressures, and curb rising medical inflation while ensuring access to and maintaining quality of care, according to the report.
Regionally, medical trend rates vary, but the upward trajectory is consistent, Lockton concluded.
