For years, employers absorbed rising healthcare costs quietly: adjusting plan designs, shifting more expense to workers and hoping the next contract cycle would bring relief.
That era may be ending.
Unsustainable cost growth, federal transparency rules, direct contracting models and a growing willingness among employers to challenge the status quo is pushing the country’s largest purchasers of healthcare toward a more confrontational stance with payers, pharmacy benefit managers and health systems.
“Almost anybody is up for a conversation on how they can materially lower their healthcare costs,” Kevin Knight, chief marketing officer of Sidecar Health, said during a recent episode of the “Becker’s Payer Issues Podcast.” “Healthcare costs have finally gotten so expensive that people are being forced to explore alternatives.”
Healthcare costs rose 4.5% in 2024, and large employers projected another 5.8% increase for 2025, according to a Mercer survey of 504 large employers last year. Prescription drug costs climbed 8% in 2024, and more than three-fourths of employers rated managing the cost of GLP-1 medications as an extremely or very important concern.
Facing those pressures, 51% of employers said they are likely or very likely to shift more cost sharing to employees in 2026, up from 45% a year earlier, according to the report. Employers are also exploring alternatives to traditional plan design: 24% are considering adding high-performance networks in the next two years, 29% are considering variable copay plans and 12% are evaluating independent vendors for high-performance networks.
Caitlin Soto, senior policy advisor for the Labor Department’s Employee Benefits Security Administration, outlined the stakes at the Purchaser Business Group on Health’s 2026 Health Policy Summit in Washington, D.C., in March. Employers are bracing for a median 9% rise in healthcare costs in 2026, driven down to 7.5% only after significant plan redesign and cost-cutting. That differential represents real tradeoffs.
“That’s 7.5% less for giving raises to American workers, 7.5% less for hiring American workers and 7.5% less for innovating to better the lives of American workers,” Ms. Soto said.
A ‘401(k) moment’ for healthcare spending?
Mr. Knight drew a pointed historical analogy: Employer-sponsored pensions, once a cornerstone of American compensation, became too costly to sustain in the 1980s, prompting a fundamental shift toward the 401(k).
“I think of this as being very parallel to what happened in the 1980s,” he told Becker’s. “Pensions became too expensive, just full stop.”
He argued that healthcare is nearing a similar inflection point, with a likely shift toward greater consumer control over spending. Health savings accounts are one potential vehicle, but their effectiveness has been limited by the same lack of transparency that plagues the broader system.
“If [people] cannot easily access price information, quality information — the types of data points that people use in making decisions for buying anything from shampoo to a new car — then how are they going to be able to effectively use an HSA?” Mr. Knight said. “There is nothing systemically preventing us from publishing the prices of every service that every healthcare provider offers, except for enormous resistance from the incumbents who stand to gain everything from the persistence of our broken system.”
Transparency rules shift power to employers
The federal government is moving to give employers more leverage.
EBSA’s proposed rule on PBM fee disclosures — developed in response to an executive order from President Donald Trump — would require PBMs to disclose, for the first time, actual dollar amounts of compensation including manufacturer rebates, price protection arrangements and all other fees. The Consolidated Appropriations Act of 2026 separately requires PBMs to pass 100% of manufacturer rebates to health plans and mandates regular reporting.
“When EBSA’s proposal is finalized, employers will receive these initial disclosures before contracts are signed, followed by semiannual reports on the actual compensation received,” Ms. Soto said. “No more guessing about where your money goes — you will see the full picture, from manufacturer rebates to affiliate incentives. This transparency will expose inefficiencies, drive competition among PBMs and ultimately lower drug costs for you and your employees.”
Mr. Knight predicted that within three years, the pace of employer transition away from legacy, network-based insurance models will accelerate. He expects the new models to share: Treating employees as active consumers rather than passive beneficiaries.
“The one thing they’ll have in common is that they will put employees in a place where they are entrusted and empowered to treat healthcare dollars like their own,” he said.
That shift carries both risk and opportunity for health systems. Employers are increasingly willing to reward providers who offer transparent, predictable pricing, and to walk away from those who don’t.
“We’re at a turning point,” Sara Richards, director of benefits for Red Bull North America, said in her closing remarks at the PBGH summit. “I believe that in working together, we can achieve a more fair and functional healthcare market.”
Editor’s note: Elizabeth Casolo contributed to this article.
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