The Employer’s Dilemma
Rising Healthcare Costs and a Broken System
For most employers in the U.S., healthcare has become not just a benefit, but a burden—one that grows heavier each year. Since the COVID-19 pandemic, the cost of providing healthcare coverage has surged dramatically, forcing businesses to make tough decisions: raise employee contributions, reduce benefits, or absorb skyrocketing costs that eat into growth and profitability. For HR leaders and executive teams alike, it’s become clear—our healthcare system isn’t just expensive; it’s broken.
The Post-Pandemic Price Surge
In the aftermath of COVID-19, healthcare costs haven’t simply rebounded—they’ve exploded. Employer-sponsored health plan costs are now up over 20% since 2020, according to multiple industry reports. In many cases, mid-sized employers are seeing double-digit increases year-over-year.
Why? A few driving factors stand out:
Delayed Care and Pent-Up Demand: During the pandemic, millions deferred screenings, surgeries, and checkups. Now, those postponed procedures are flooding back in, often more complex and costly than they would have been earlier.
Labor Shortages and Inflation: Healthcare providers are grappling with staffing shortages, higher wages, and inflation on medical supplies and pharmaceuticals—all of which trickle down into higher insurance premiums.
Mental Health Crisis: Rising demand for mental health services has overwhelmed networks and driven up costs. Employers are expected to cover it, but access and quality remain inconsistent.
Pharmaceutical Prices: Specialty drugs—many with five- or six-figure price tags—continue to dominate spending. And unlike other countries, the U.S. has few controls on drug pricing.
A System Built to Confuse
Beyond the price tag, there’s the maze itself. Even well-educated, resource-rich employees routinely struggle to understand their benefits, find in-network care, or decipher medical bills. If the system is this difficult for HR professionals to explain, how can the average American be expected to navigate it?
The complexity is by design. With layers of providers, insurers, pharmacy benefit managers (PBMs), billing departments, and opaque contracts, the U.S. healthcare system creates confusion at every level. The result? Waste, inefficiency, and frustration—for patients and for employers footing the bill.
Who’s to Blame?
Pointing fingers is easy. Fixing the system is not. But if there’s one truth, it’s this: the current structure works well for those profiting from it—and that’s not employers or employees.
Insurance Companies profit whether care is used or not. Administrative costs and executive bonuses continue to rise.
Hospital Systems operate like monopolies in many regions, charging whatever the market—or lack of competition—will bear.
Pharmacy Benefit Managers (PBMs) add complexity and cost while operating behind a curtain of rebates and undisclosed pricing deals.
Lawmakers, influenced by lobbying powerhouses, have failed to push through meaningful reform or cost transparency.
In the end, the real injustice is that employers—who provide coverage for over 150 million Americans—are trapped in a system they don’t control, paying more for less and watching employee satisfaction erode.
Where Do We Go From Here?
Employers are starting to fight back: embracing direct contracting, exploring self-funded models, demanding price transparency, and partnering with vendors who prioritize value over volume. But systemic change will take more than innovation—it will require advocacy, alignment, and courage.
Until then, employers remain on the front lines of a system that continues to take more than it gives.