The Hamster Wheel of Health Costs—and How to Get Off

Every fall, the same ritual plays out in offices across the country.

The renewal lands. The numbers are ugly. This year Mercer is projecting a 6.5% jump in 2026—the steepest rise in more than a decade. And that’s the “managed” number. If nothing changes, some employers will be looking at increases closer to 9%.

That’s not a bump. That’s a body blow.

What happens next is painfully predictable. Leaders gather around the table, look at the numbers, and ask: “What can we do to soften this?”

The answers are always the same:

• Raise employee contributions.
• Increase deductibles.
• Adjust copays.
• Cross your fingers for next year.

Then it starts all over again.

That’s the hamster wheel. Running faster every year, but never moving forward. Costs keep climbing, benefits keep shrinking, and employees get squeezed in the middle.

Why the Cycle Never Stops

The reason the wheel keeps turning isn’t bad luck. It’s baked into the way traditional health plans are designed.

The big carriers (you know the names) operate on a model that guarantees the problem gets worse:

• “Discounts” that aren’t real. A 50% discount sounds good—until you realize it’s off a sticker price nobody actually pays.
• Bills without oversight. Claims are rubber-stamped and paid. Waste and errors pile up.
• Pharmacy chaos. Middlemen play games with rebates and pricing while employers foot the bill.

It’s like being sold on buying groceries at “half off,” only to learn the store doubled all the prices before you walked in.

When you look at it that way, Mercer’s projection isn’t shocking at all. It’s the natural result of a broken system.

What It Feels Like Inside the Wheel

We see this story over and over again.

A mid-sized company gets their renewal: double-digit increase. Not the first time. The year before was nearly as bad. The solutions offered? Raise deductibles, shift costs to employees, maybe shop to another carrier who promises the same thing in different packaging.

The leaders know it doesn’t solve anything, but they feel boxed in. So they go along, tell employees “we had no choice,” and hope next year will be different.

But next year isn’t different. It’s the same.

If this feels familiar, it’s because you’re living it. Most employers are.

What Happens When You Step Off

Here’s the good news: some employers have chosen to step off the hamster wheel. They stopped accepting that “this is just the way healthcare works” and built something different.

What changes when you do that?

• Every claim gets a second look. Waste and errors don’t just slide through.
• Prices are transparent. No fake discounts, just fair and predictable costs.
• Pharmacy spend is managed. No more games with rebates or middlemen.
• Benefits are employee-first. Instead of making care harder to afford, plans make it easier.

And when employers run their plans this way, the results are night-and-day:

• 48% below national benchmarks on medical claims
• 59% lower inpatient costs
• 39% lower outpatient costs
• 63% lower pharmacy spend
• Renewal rates averaging just 4%, often without changing benefits

That’s not a theory. That’s a proven outcome from doing things differently.

Why Most Employers Stay Stuck

If it’s possible to escape the cycle, why don’t more employers do it?

Three big reasons:

1. It feels safer to stay with what you know. Even if it’s not working, it’s familiar.
2. Time is scarce. HR leaders and CFOs are already stretched thin. Rethinking benefits feels overwhelming.
3. The myth that nothing can be done. Carriers have convinced employers that rising costs are inevitable, like the weather.

But costs aren’t the weather. They don’t just “happen” to you. They’re the result of a system you can actually change—if you’re willing to.

What Leaders Can Do Right Now

You don’t have to overhaul everything tomorrow. But you do need to start thinking differently today.

Here are three practical steps:

1. Get clear visibility. Do you actually know where every dollar of your plan goes? If not, you’re not running a plan—you’re writing blank checks.
2. Look at pharmacy first. Drug costs are growing faster than any other category. If you don’t know how rebates and pricing games affect you, that’s your starting point.
3. Change the question. Stop asking, “How do we make this increase less painful?” Start asking, “How do we get off the hamster wheel altogether?”

That shift in mindset is the first move toward real change.

Preparing for 2026

The Mercer numbers aren’t just another data point. They’re a flashing red light.

A 6.5% increase is not a one-time shock. It’s proof that the hamster wheel is only spinning faster.

So here’s the choice every employer faces heading into 2026:

• Stay on. Accept the increase, pass more costs to employees, and repeat the same cycle next year.
• Step off. Start running your plan differently—with control, transparency, and benefits that actually work for your people.

If you’re tired of running in place, maybe it’s time to try something new.