Yves here. This article discusses the rising costs faced by both employees and employers depending on company size, as well as the significant increases projected for the coming year. It also highlights key factors influencing these trends, such as AI’s role in improving upcoding practices for healthcare providers.
The fact that upcoding isn’t consistently prosecuted raises questions. Electronic health records are designed to be unalterable by practitioners after submission, making it relatively straightforward for attorneys general to compare billing codes with the originally submitted codes during legal discovery.
By Julie Appleby. Originally published at KFF Health News
Rising healthcare costs impact not just those purchasing individual health insurance policies but also employers and their employees. This year’s increases, coupled with those anticipated for 2027 plans, amplify concerns regarding affordability ahead of the midterm elections.
Polls indicate that healthcare expenses — alongside affordability as a broader issue — rank among voters’ top concerns. While considerable focus has been placed on soaring costs and dwindling enrollment in Affordable Care Act plans that serve approximately 19 million individuals, employer-based plans are now also exerting financial strain on over 150 million Americans covered through their jobs.
One crucial change this year was the increase in worker contributions toward their coverage, which rose by an average of 9% to $7,471 annually for a family, according to an extensive annual survey released on October 22 by KFF, a nonprofit health information organization that includes KFF Health News. This uptick follows a 7.6% increase observed between 2024 and 2025.
Employers also experienced growing costs, with the average family coverage premium climbing by 5% to $28,303, as per the survey findings.
In reaction to this rise — which follows a 6% increase the previous year — 44% of large employers, specifically those with at least 200 employees, reported that they increased the amounts employees must contribute toward their coverage.
“Higher usage or rising prices limit the options available to employers looking to curb premium hikes,” noted Matthew Rae, associate director of the Program on the Health Care Marketplace at KFF.
Employers also reported implementing various strategies to manage costs over the past year, including raising deductibles (the amount employees pay before insurance kicks in), switching insurers, introducing pre-approval for certain services, or narrowing the range of healthcare providers available to employees, according to the KFF report.
Worker earnings saw an average increase of 3.7% this year, in contrast to overall inflation at 2.7%.
Interestingly, employees at small businesses, defined as those with fewer than 200 employees, faced higher healthcare costs than those in larger firms.
For instance, health plans at large companies had an average annual deductible of $1,772 for individual employees, while small businesses reported an average of $2,624.
Overall, the proportion of total premium costs that workers contribute across all companies saw only a minor increase compared to the previous year, reaching 27% for family coverage and 18% for individual plans, with employers covering the rest.
Factors Contributing to Rising Costs
Other organizations have also released projections regarding potential employer costs for the upcoming year.
The consulting firm AON predicts a 9.5% increase for employers next year, marking the fourth straight year of significant hikes, while a similar firm, Marsh, estimates an increase of 8.2%, the largest rise since 2003. Various factors are escalating costs, including higher service utilization rates and soaring prescription drug prices alongside rapidly increasing hospital expenses, according to reports.
AI technology has also emerged as a cost driver, as noted in other studies, including one from the Business Group on Health, which represents self-insured employers. This report indicated that hospitals and healthcare providers are utilizing AI to enhance billing processes for both insurers and patients.
Predictions from the business group indicate a median premium increase of 9.2% next year, although employers may mitigate this by making benefit changes.
Previously, employers absorbed most cost increases, but “that trend is beginning to shift,” stated Jim Winkler, chief strategy officer for the group. “As open enrollment approaches, most employees will encounter rising out-of-pocket expenses in addition to their paycheck contributions.”
Looking to the future, the group recommends that employers take further initiatives to prevent increases in 2028. One potential strategy is to offer lower copayments for specific healthcare providers based on their pricing or quality — a concept known as “tiered networks.” While employers and insurers have attempted this approach before, it has only been maintained by 4% of companies according to the KFF survey. “What’s old is new again,” Winkler remarked, suggesting that the advent of apps that display providers’ lowest copayment options might enhance its effectiveness now more than ever.
Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, highlighted another often-overlooked aspect of rising health costs: the healthcare industry itself, including hospitals, pharmaceutical companies, and insurers.
She asked, “Why are the employers — the customers in this situation — the ones being questioned about what they’re doing to address this issue? The industry is clearly not taking any action to control costs, as evidenced by the incessant increase in expenses,” she said.
Businesses are now leveraging new pricing information mandated by federal regulations to directly negotiate with hospitals and other healthcare providers, as well as to invest in primary care services.
Mitchell along with others advocates for congressional involvement. For instance, health policy researchers from Georgetown University propose measures such as capping annual deductibles, instituting hospital price limits, and extending Medicare-negotiated drug prices to the private sector.
Keeping Costs in Check
Not all companies experienced increased costs this year.
For example, KFF survey participant Phifer Inc., an Alabama-based manufacturer of insect screens and precision woven products, managed to keep its healthcare costs stable this year. This stability is likely attributable to its commitment to providing zero-cost primary care through on-site clinics and establishing direct contracts with healthcare providers, according to Russell DuBose, the company’s vice president of human resources.
While only 7% of companies in the KFF survey reported having an on-site clinic, 24% indicated having one nearby.
DuBose noted that employees can quickly access primary care, which aids in both disease prevention and early identification of health issues. The company also contracts directly with various specialists.
“We guide plan members towards the most qualified providers we can find,” DuBose explained. “By doing that, we are securing more reasonable prices.”
Like many employers, the company is self-insured, meaning it directly covers all expenses while purchasing stop-loss insurance for exceptionally high bills. This coverage has likewise seen a price increase, according to DuBose.
He often receives inquiries from other employers about his company’s strategy and ways to manage costs. Now, more than in previous years, he expressed that employers are increasingly anxious about escalating costs and the implications for their businesses.
“The concern is: Could the rising cost of healthcare become the next employment crisis?” he remarked.
Additional findings from the annual KFF report include:
- Nearly 29% of all surveyed companies indicated that the incorporation of GLP-1 medications, a new class of weight-loss drugs, has significantly impacted their drug costs.
- Around 29% of large companies reported difficulties acquiring information regarding their plans’ medical care expenses or price comparisons among providers.
- Around 9% of companies with 50 or more employees resort to purchasing prescription medications from outside the U.S. to cut costs.
