What You Ought to Know:
– The U.S. healthcare system is getting into 2026 with medical price traits harking back to 15 years in the past, dealing with persistent inflationary forces and important federal coverage adjustments, in response to a new report from PwC.
– The report, “Medical Cost Trend: Behind the Numbers 2026,” initiatives the Group medical price pattern to stay at 8.5% in 2026 (the identical degree as 2025) and the Particular person market pattern at 7.5%. Pharmacy prices are a selected concern, projected 2.5 factors increased than the medical pattern.
PwC’s well being researchers surveyed and interviewed actuaries at 24 U.S. well being plans, masking over 125 million employer-sponsored members and 12 million Reasonably priced Care Act (ACA) market members, to generate these projections. All beforehand projected traits for 2024 and 2025 have been restated increased, signaling a sustained problem.
Key Inflators of Medical Prices
A number of elements are driving the upward pattern in medical prices:
- Hospital Prices: Hospitals and well being methods proceed to face elevated costs for every part from wages to provides. Hospital year-end working margins averaged simply 2.1% in 2024, considerably under 2019 ranges (7.0%), and declined additional in Q1 2025. Many hospitals are coping by leveraging Income Cycle Administration (RCM) methods to maximise income seize, resulting in elevated inpatient admissions and better care severity that finally shifts prices to industrial payers.
- Surges in Behavioral Well being Spending: Utilization of behavioral well being (BH) providers is hovering, with inpatient claims up almost 80% and outpatient claims up virtually 40% between January 2023 and December 2024. One in three well being plan actuaries surveyed named BH providers as a prime three inflator, anticipating a ten% to twenty% pattern for behavioral well being subsequent yr.
- Drug Spending and New Therapeutics: U.S. drug spending grew by $50 billion (11.4%) to $487 billion in 2024. This development is pushed by oncology, immunology, cardiovascular, weight problems, and diabetes medicine.
- GLP-1s: These weight-loss medicine proceed to be a prime price inflator for well being plans, projected to account for 0.5% to 1.0% of the estimated medical price pattern for 2026. Whereas they provide potential long-term well being advantages, challenges with adherence and sustained behavioral modification persist.
- Cell and Gene Therapies (CGTs): Whereas not but a significant price driver, there’s concern that these high-cost, breakthrough therapies (e.g., for sickle cell illness, hemophilia) will exert important inflationary strain as extra enter the market and adoption will increase.
Federal Coverage Shifts Add to Price Pressures
Medical price pattern pressures are intensified by important adjustments in federal well being coverage and regulation, notably the “One Large, Stunning Invoice” (OBBB/H.R. 1), signed into legislation in July 2025.
- Medicaid and ACA Subsidies: The OBBB is projected to scale back federal healthcare spending by $1 trillion over the subsequent 10 years by tightening Medicaid eligibility (doubtlessly resulting in thousands and thousands extra uninsured by 2034) and permitting enhanced ACA subsidies to run out. This might immediate suppliers to hunt increased charges from industrial payers to compensate for decreased public funding.
- Tariffs: Proposed tariffs on pharmaceutical imports threaten to drive up drug costs and worsen shortages.
Deflators: Countering the Upward Development
Regardless of the inflationary forces, some elements are working to mood price will increase:
- Biosimilars: Biosimilar adoption continues to be a key deflator. In 2024, private-label methods boosted Humira biosimilar uptake considerably. In 2025, an identical pattern is rising with Stelara, as seven FDA-approved biosimilars (together with private-label variations) launch at over 80% lower than the reference product. Well being plans cite biosimilars because the main price deflator for the third consecutive yr.
- Strategic Price of Care Administration: Well being plans are seeing some success in managing the overall price of care by deploying utilization administration, claims integrity evaluations, pharmacy oversight, and prescription administration packages, typically weaving AI into their processes.
Act Now: Methods for Well being Plans and Employers
PwC emphasizes that price containment should change into an working precept for well being plans:
- Strengthen Fee Integrity and UM: Well being plans want sturdy utilization administration (UM) and fee integrity packages, leveraging predictive analytics and pre-payment audits to stop funds overruns and guarantee billing accuracy. Worth-based contracts may also help shift prices again to suppliers.
- Rethink Pharmacy Profit Technique: This contains auditing present pharmacy companions, exploring clear Pharmacy Profit Managers (PBMs) or Pharmacy Profit Directors (PBAs), and tightening oversight of GLP-1s by means of enhanced prior authorization and value-based contracts. Integrating GLP-1 protection with wraparound providers like diet counseling and digital teaching is essential for sustained well being advantages.
- Handle Excessive-Price Therapies: For CGTs, well being plans ought to discover modern reimbursement fashions like outcomes-based rebates, milestone-based funds, and carve-out partnerships. They need to additionally streamline biosimilar approvals and push for clear rebate negotiations with PBMs.
- Embed AI and Digital-First Interventions: Well being plans ought to embed AI into care administration, pre-payment audits, and care coordination to spice up effectivity and affect. Prioritizing digital-first interventions that have interaction members with minimal overhead is important. Foundational investments in information infrastructure can sharpen analytics and improve fraud, waste, and abuse detection.
- Employer Engagement: Employers ought to set clear pattern targets and maintain well being plans and distributors accountable for efficiency metrics associated to GLP-1 oversight, behavioral well being integration, and pharmacy price drivers.
Name to Motion: Creating A Affected person-Centric Ecosystem
The 2026 medical price pattern alerts a necessity for daring reinvention in healthcare. Longer-term, this implies reallocating spending to create a patient-centric ecosystem centered on preventive, personalised, and predictive care, with versatile websites. Payers will change into “well being architects,” steering care and managing prices, whereas suppliers leverage AI for effectivity and connectivity throughout the ecosystem.
