Employers Brace for a Possible 10% Jump in Health Care Costs for 2026
As we approach 2026, companies across the globe are preparing for a steep rise in employer-sponsored healthcare expenses. In fact, some Africa employers are projecting a median increase of 10% in health care costs next year.
What’s Driving Health Care Cost Increases?
Several key factors are fueling this anticipated surge:
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Catastrophic claims—such as one-off, high-cost medical events—were cited by 31% of employers as the primary driver, up sharply from 20% last year.
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Specialty and costly prescription drugs, particularly GLP-1 medications for obesity, cancer treatments, and emerging cell and gene therapies, remain a substantial cost pressure.
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Employers are also seeing increased utilization of care, especially for chronic conditions and mental health services.
How Employers Plan to Respond
To manage these rising costs, organizations are exploring several strategies:
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Cost-sharing initiatives such as higher deductibles, coinsurance, or increased premium contributions — up from 21% last year to 27% for 2026.
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Plan design changes, including eligibility audits, high-deductible health plans, formulary adjustments, and spousal surcharges—now 17%, up from 15% in the previous year.
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Purchasing and provider strategies like telemedicine expansion, price transparency tools, centers of excellence, and advocacy programs—also rising to 17%, up from 9% last year.
Moreover, reports suggest that if employers don’t adjust plan design, costs might climb even higher—up to 9%, but smart redesigns could temper increases to about 7.6%.
Additionally, pharmacy costs are expected to soar, with 11% to 12% projected increases in that category.
What This Means for African Employers
While most of this data stems from Africa surveys, the underlying trends—rising drug costs, increased usage of specialty medications, and growing demand for mental health and chronic condition support—are equally relevant to African employers.
Potential African Contextual Factors:
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Import costs, currency fluctuations, and limited local supply chains may further escalate medication expenses.
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Out-of-pocket responsibility often remains high for African employees; increased cost-sharing could significantly impact affordability and access to care.
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Healthcare infrastructure varies widely across the continent, meaning the cost burden may manifest differently in each region.
Recommendations for HR Leaders in Africa
To proactively navigate this shift, African employers and HR leaders should consider the following strategies:
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Review Plan Designs
Assess your current health benefits structure. Where possible, introduce tiered plans, telehealth services, or wellness schemes to offer flexible and cost-effective alternatives. -
Enhance Cost-Sharing Balance
While shifting costs may be necessary, maintain fairness. Consider subsidies, especially for lower-income staff, to ensure access remains equitable. -
Explore Local and Regional Purchasing Collaboratives
Collaborating with other organizations to negotiate better pricing for medications—especially specialty drugs—can yield significant cost savings. -
Invest in Preventive & Wellness Programs
While the return on investment varies, programs focusing on chronic illness prevention, mental health, and lifestyle management can help reduce long-term costs. Wikipedia+1 -
Prioritize Mental Health Access
As utilization of mental health services continues rising, offering accessible support can improve employee wellbeing and reduce more costly interventions later. -
Leverage Telemedicine & Technology
Remote consultations and digital health services can lower overhead and expand access, especially in regions with limited healthcare infrastructure. -
Educate Employees
Provide transparent communication about why cost changes are happening and how they can make informed choices. Empowered employees are better at navigating cost-sharing structures and wellness resources.
