Annual premiums for U.S. employer-sponsored family health coverage increased 6% in 2025 to $26,693. And that number is expected to rise even more in 2026, with employers projecting a median 10% increase in healthcare costs.
Employer healthcare costs rising is nothing new, but there’s little precedent for projected increases like what we’ve seen in recent years. Let’s dive into what is driving these increases and how innovative mental health solutions can help your organization contain these rising costs.
Employer healthcare costs are rising. What’s driving this?
There’s no one cause you can point to as universally driving up healthcare costs, but here are a few frequent contributors:
- GLP-1s. Weight loss drugs, such as GLP-1s, have emerged as a driver of healthcare costs for employers. In a 2025 survey, 79% of employers said they’re seeing an increase in member utilization of obesity treatments, with another 15% saying they anticipate they will see an increase.
- High-cost claimants. For fully funded health plans, high-cost claimants (ER visits, out-of-network care, etc.) lead to increased premiums down the road. For self-funded health plans, high-cost claimants impact the here and now.
- Medical care utilization. The unit cost and utilization of healthcare services have increased. And that’s left employers seeking a way to contain these costs and ensure benefits are providing value.
- Mental health and substance use needs. 73% of employers say they are currently seeing an increase in services to treat mental health and substance use disorders.
- Pharmaceutical costs. U.S. employers are expecting an 11 to 12% increase in pharmacy costs in 2026, which outpaces the percentage gain in general healthcare costs projected. GLP-1s contribute to this, but 50% of respondents to a recent survey who cited prescription drug cost concerns indicated that cancer drugs were also predominantly responsible.
- Cancer and musculoskeletal conditions. Cancer care is increasingly driven by high-cost specialty drugs, longer treatment durations, and survivorship-related care needs. Musculoskeletal conditions—often linked to chronic pain—drive repeat imaging, procedures, surgeries, and long recovery timelines. Together, these conditions are frequently cited by employers as top contributors to catastrophic and recurrent high-cost claims.
A better mental health solution can help contain costs
Rising costs create complexity for benefits leaders, who are trying to balance budgets without sacrificing employee wellbeing. Enhanced EAPs offer a unique, high-leverage opportunity to address this challenge because it intersects with nearly every other cost driver. By treating mental health effectively, you can influence medical utilization, chronic disease management, high-cost events, and workforce productivity.
GLP-1s and obesity treatment costs: Where mental healthcare fits
The GLP-1 conversation isn’t just medical. It’s deeply psychological, shaped by stress, stigma, and a culture that too often equates body size with moral worth or “health.”
That’s why mental healthcare has an important role to play, not to replace GLP-1s or weight management programs, and not to take a position on who should or shouldn’t use these medications (that’s a medical and plan-design decision). Instead, mental healthcare can help employers address the behavioral and emotional dynamics that often show up alongside weight change efforts, including:
- Body image distress and weight-related anxiety in a fat-phobic culture
- Depression or anxiety that can affect motivation, sleep, and self-care routines
- Disordered eating risk and the reality that many people may not be screened for eating disorders before starting a GLP-1
Practically, employers can strengthen their GLP-1 strategy by building an obesity-care pathway that includes psychological and behavioral support. For example, access to measurement-based mental healthcare, coaching, and care navigation can help people set sustainable routines, challenge shame-driven “all-or-nothing” thinking, and stay engaged in care.
It’s also important to keep the goalposts honest. Weight is only one marker of health. For many people, lasting progress may show up in improved mental wellbeing and healthier behaviors alongside other clinical indicators.
High-cost claimants: Prevention, early intervention, and navigation
Untreated mental health needs often escalate into avoidable, high-cost medical events. A mental health crisis that goes unaddressed can lead to emergency department visits, inpatient stays, or expensive out-of-network claims.
An enhanced EAP helps mitigate these risks. By connecting employees to in-network care quickly, you can steer them away from high-cost settings and toward appropriate, evidence-based treatment. In that way, mental health utilization is a great way in driving down overall healthcare costs.
For self-funded employers, this approach reduces the volatility associated with shock claims. For fully insured plans, preventing these escalations helps keep long-term premiums stable.
Mental health utilization is a key driver in containing employer healthcare costs, which is how organizations truly experience mental health ROI. Watch below as Casey Smolka, Lead Product Manager, Data Products at Spring Health, breaks it down.
Rising medical utilization: Getting people to the right care sooner
When employees cannot access timely mental healthcare, they often turn to expensive default settings like urgent care clinics or emergency rooms. These visits drive up medical utilization without resolving the root cause of the distress. This cycle leads to repeated visits and fragmented care that fails to improve the employee's health.
Faster access to specialized care breaks this cycle. When employees can see a provider within days rather than weeks, they receive the right support before their condition worsens. Measuring outcomes is essential here. Tracking symptom improvement and engagement rates ensures that the care provided is effective, reducing the need for repeated, low-value medical interactions.
Mental health/substance use: Treat early to reduce downstream costs
Untreated mental health and substance use disorders complicate the management of chronic diseases like diabetes and hypertension, increase the risk of workplace incidents, and contribute to higher rates of disability and leave of absence.
Better care looks like early identification and evidence-based treatment. Programs that use measurement-based care to track progress help ensure that employees get better, not just that they get services. Culturally responsive provider matching further enhances engagement, ensuring that employees feel understood and stick with their treatment plan. By addressing these needs proactively, employers can reduce the downstream financial impact of untreated conditions.
Pharmaceutical costs: Where mental health reduces avoidable spend
While specialty drugs and GLP-1s drive a large portion of pharmacy spend, mental health support can influence other areas of prescription costs. For example, effective management of anxiety or depression can improve adherence to medication regimens for other chronic conditions, preventing complications that require expensive pharmaceutical interventions.
Additionally, addressing substance use disorders through proper clinical pathways can reduce risks associated with unsafe pain management. Adherence support provided by mental health professionals helps ensure that employees use medications safely and effectively. This approach helps reduce avoidable pharmacy spend without overpromising on the complex drivers of drug pricing.
Cancer and musculoskeletal costs: How mental healthcare helps reduce escalation and repeat utilization
A cancer diagnosis or chronic pain condition frequently brings anxiety, depression, sleep disruption, and uncertainty about work, finances, and identity. When these mental health needs go unaddressed, employees are more likely to disengage from care plans, experience complications, rely on emergency settings, or remain out of work longer than necessary. Caregivers face similar risks, contributing to absenteeism and productivity loss that often goes unmeasured.
Mental healthcare plays a complementary role alongside medical treatment by stabilizing the psychological factors that shape utilization and recovery. Timely access to therapy, coaching, and care navigation helps employees cope with diagnosis-related distress, manage pain more effectively, and stay engaged in appropriate treatment pathways. Measurement-based mental healthcare can also support sleep, motivation, and adherence, which can influence whether care remains preventive and planned or escalates into high-cost, reactive use.
Take control of rising costs
Rising healthcare costs are a reality, but they are not uncontrollable. By prioritizing mental healthcare that is fast, effective, and integrated, you can address the root causes of many high-cost claims.
An enhanced mental health solution does more than support employee wellbeing. It serves as a practical, strategic lever to manage medical, pharmacy, and productivity costs across your organization.
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