As employers work against 2026 benefits budgets, they’re confronting an uncomfortable reality: healthcare costs are projected to rise roughly 9% next year, on top of last year’s increases. For HR leaders already navigating wage pressure, retention concerns, and economic uncertainty, the annual renewal cycle has become a familiar — and frustrating — exercise in absorbing higher costs or shifting more of the burden to employees.
But this year feels different.
Pharmacy cost trends are accelerating, driven largely by GLP-1 medications and specialty drugs. Utilization of high-cost specialty care continues to climb. And chronic disease remains the single biggest driver of long-term claims volatility. Employers are not just facing incremental inflation — they are facing unprecedented structural cost growth.
The question isn’t whether costs will rise. It’s whether employers will continue managing around the margins — or address the root cause.
The GLP-1 effect and the specialty spiral
GLP-1 medications have reshaped the treatment landscape for diabetes and obesity. For many patients, they are clinically transformative. For employers, however, they represent a rapidly expanding cost center — often thousands of dollars per member per year.
Without coordinated oversight, prescribing patterns can become reactive. Patients may receive medication without sustained behavioral support, nutritional counseling, or longitudinal management. Discontinuation rates are high. Weight regain is common. And downstream costs remain.
GLP-1s are only part of the story. Specialty drug spending overall is growing faster than traditional pharmacy. Referrals to high-cost specialists continue to increase. Emergency department utilization remains elevated, even when a significant portion of visits could be managed in lower-acuity settings.
These trends share a common thread: fragmented primary care.
The throughput problem in primary care
Today’s primary care physicians (PCPs) are often compensated based on volume — how many patients they see, how many visits they complete. That model incentivizes speed over depth.
Short appointments limit opportunities to: coordinate specialty referrals; monitor medication adherence; address behavioral health; tackle underlying drivers of chronic disease; and support sustainable weight management alongside GLP-1 use.
In that environment, high-cost interventions become the path of least resistance. Prescriptions are written. Tests are ordered. Referrals are made. Each step may be clinically defensible—but collectively, they escalate employer costs.
Primary care should function as the central coordinator of a patient’s health journey. Instead, it often operates as a gatekeeper overwhelmed by throughput demands.
What happens when incentives change
Evidence consistently shows that stronger primary care systems are associated with lower overall costs and better outcomes. Research supported by organizations such as the Commonwealth Fund has linked robust primary care access to reduced hospitalizations and lower total spending.
When physicians have time — and are compensated for quality rather than volume — several things change: GLP-1 prescribing becomes more coordinated and sustainable; chronic conditions are managed proactively rather than episodically; patients are less likely to default to emergency departments; and behavioral health and social drivers of health are addressed earlier.
Trusted physician-patient relationships matter. Studies have shown that patients with strong primary care relationships experience lower mortality risk and lower overall healthcare spending. For employers, that translates into fewer high-cost claims events and less volatility.
Why this matters for HR leaders
Chronic disease doesn’t just inflate claims data — it erodes productivity.
Diabetes, cardiovascular disease, and untreated behavioral health conditions are leading contributors to absenteeism and presenteeism. Employees managing poorly controlled chronic illness are more likely to miss work, utilize short-term disability, and disengage.
At the same time, cost-shifting strategies are nearing their limits. Higher premiums and deductibles may reduce utilization in the short term, but they also increase employee dissatisfaction and delay necessary care — often resulting in higher costs later.
HR leaders need strategies that stabilize spending without undermining employee trust.
What employers can do now
Employers don’t need federal reform to begin changing the trajectory. Many are already experimenting with: advanced primary care models that emphasize longer visits and care coordination; direct contracting arrangements; value-based payment models tied to outcomes; and more.
These approaches shift investment upstream — where it can prevent downstream specialty escalation.
Instead of asking how to contain GLP-1 costs through restrictions alone, employers can ask: Are our primary care providers positioned to ensure these medications are part of a comprehensive, sustainable treatment plan?
And instead of focusing only on specialty carve-outs, employers can ask: Are unnecessary referrals occurring because primary care lacks time and coordination infrastructure?
The Opportunity: Proactive healthcare benefits the business, and the people
Employers are the second-largest healthcare payers in the United States after the federal government. That position gives them leverage — and responsibility.
Continuing to manage healthcare inflation through annual premium adjustments is not a long-term strategy. As specialty drug spend rises and chronic disease prevalence grows, reactive cost control will fall short.
Reinforcing primary care — structurally and financially — is not a soft benefit enhancement. It is a cost-containment strategy grounded in prevention, coordination, and trust.
As HR leaders revisit 2026 budgets and plan ahead, the most impactful question may not be how to trim pharmacy spend or negotiate specialist discounts. It may be far more foundational: Are we investing enough at the front door of care to prevent the most expensive outcomes from occurring in the first place?
Photo: turk_stock_photographer, Getty Images
Nirav Vakharia, MD, serves as the Chief Operating Officer of Marathon Health, where he leads clinical and business operations for a national network of nearly 700 health centers. A practicing internal medicine physician with nearly two decades of experience, Dr. Vakharia is a dedicated advocate for value-based primary care. Before stepping into the COO role, he served as the company’s Chief Health Officer and held executive leadership positions at Panoramic Health, Babylon Health, and the Cleveland Clinic, where he managed care for over 400,000 lives. Dr. Vakharia earned his MD from Harvard Medical School and completed his residency at Brigham and Women’s Hospital. His unique perspective is shaped by his background as a former engineer and middle school teacher, allowing him to apply a “first-principles” approach to healthcare innovation.
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