New insights from Willis Towers Watson highlight how rapidly increasing costs for employer-sponsored healthcare are pushing the issue to the level of the C-suite and board.
Costs continue to skyrocket: The costs of employer-sponsored health insurance are increasing at the fastest rate in 20 years, while quality of care continues to lag as compared to other developed countries.
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Health insurance is now the second largest employee expense after salaries for most businesses, and WTW survey data shows that premiums will increase by 9.1% in 2026.
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Many employers will see double-digit annual increases within the next three years.
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Increased legal risks can further exacerbate costs, as lawsuits over healthcare vendor selection due diligence continue to proliferate.
Where the board should step in: According to WTW, diligent boards should determine whether leadership has access to the right data for evaluating healthcare needs, including on enrollment in plan, utilization, and spending.
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Corporate leadership should be regularly evaluating such metrics and selection outcomes to analyze where costs can be mitigated.
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Companies should use multi-year data dashboards to avoid erratic, short-term changes.
Action steps for boards:
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Educate directors about the impact of healthcare expenses on the company and its employees.
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Establish a regular cadence of management team reporting on medical quality, cost trends as well as program utilization and engagement.
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Review regular procurements by management to obtain the highest value and accountability from health plans, pharmacy benefit managers and other vendors in the healthcare space.
Insist on a strategic plan to address the challenge of healthcare costs consistent with fiduciary responsibilities, business objectives, culture and overall strategy.
