Healthcare costs are climbing again. And some of the country’s largest employers are already making significant changes in response.
As Becker’s Healthcare reports, Disney is restricting spousal coverage. Bloomberg is introducing employee premium contributions for the first time. Starbucks is ending GLP-1 coverage for weight loss.
These aren’t isolated decisions. They’re happening against the backdrop of another significant increase in healthcare costs.
Aon projects employer healthcare costs will rise 9.5% in 2027. WTW’s survey of 471 employers puts the increase even higher, at 11.1% — the steepest projected single-year increase in nearly two decades.
The pressure is real. But what’s especially important is how employers respond to it.
Large employers are pulling the levers they have left
For the country’s largest employers, the decision about how to fund their health plan was made decades ago. Most are already self-funded.
That means when costs rise, the levers available to them tend to be within the plan itself: spousal eligibility, employee premium contributions, network breadth, drug coverage and other elements of plan design.
Those changes can reduce employer costs. But they can also shift costs, restrict access or reduce benefits for employees.
Smaller and midsize employers are in a different position.
They still have another lever available to them — and potentially a much bigger one.
For SMBs, funding is still on the table
Many smaller employers remain in traditional fully insured health plans. That means before changing benefits or asking employees to shoulder more of the cost, they can ask a more fundamental question:
Is the way we fund our health plan still the right model for our business?
Changing the funding model can give employers an opportunity to address healthcare costs without immediately cutting benefits or increasing employees’ share of the bill.
And SMB leaders appear increasingly willing to explore that possibility.
In ParetoHealth’s State of Healthcare Spend survey of more than 1,500 CEOs, CFOs and HR leaders at small and midsize businesses, 77% said they’re exploring alternative health plan funding arrangements.
That’s an important signal.
Employers recognize that the status quo is becoming harder to sustain. But for SMBs, following the same playbook as the country’s largest companies may mean overlooking the biggest lever they still have available.
Before changing the benefits, question the model
With healthcare costs projected to rise sharply again in 2027, doing nothing is increasingly difficult to justify. Every employer should be evaluating what it can change.
But the right change depends on where you’re starting.
Large employers that are already self-funded may have little choice but to look deeper into plan design and utilization. Smaller employers often have a different opportunity: reconsider the underlying economics of how their health plan is funded.
That leads to a different conversation.
Instead of starting with Which benefit should we cut?
Start with Is our funding model still the right one?
For many SMBs, that may be the most consequential healthcare question they ask this year.
See how self-funding can give smaller and midsize employers more control over healthcare costs without cutting employee benefits.
