Health Cost Growth Needs a Better Renewal Question
Mercer's National Survey of Employer-Sponsored Health Plans points to the pressure employers are already feeling. Mercer reports that average health benefit cost per employee rose in 2025 and is projected to rise again in 2026, with prescription drugs and expensive therapies helping drive the increase.
The source idea is straightforward: health plan cost growth is not a one-year irritation. It is becoming a business planning issue. Employers can respond by pushing more cost to employees, but that does not explain the plan, manage the vendors, or create a better decision file.
For a CEO or CFO, the better question is not, "How much can we absorb?" The better question is, "Which costs are we actually managing, and which costs are we simply passing through?"
Why This Matters To Self-Funding
A self-funded health plan gives an employer more visibility into claims, pharmacy spend, stop-loss risk, vendor fees, and care patterns. That visibility is valuable only if leadership uses it before renewal.
If claim cost is rising, the company should know which categories are moving. If pharmacy spend is climbing, the company should know whether rebates, specialty drugs, formularies, and PBM compensation are being reviewed. If fixed costs are rising, the company should know which vendor agreements are worth renegotiating.
Self-funding does not magically control cost. It gives leadership a better set of tools. The work is making sure those tools are actually used.
The Trap In A Fast Renewal
When the renewal number arrives late, the conversation often collapses into three choices: raise contributions, raise deductibles, or shop the market. Those may be options, but they are not a strategy by themselves.
Cost shifting can buy time. It can also frustrate employees, weaken recruiting, and leave the underlying cost drivers untouched. Shopping can create leverage. It can also turn into a spreadsheet beauty contest if nobody has audited the current plan.
The missing step is usually governance. What changed? Who reviewed it? Which vendor owns the fix? What data proves the recommendation? What will leadership check 90 days after the decision?
Where Superior Fits
Superior Insurance Advisors and Paul.Health are built around that plain-English review. The goal is not to make healthcare sound complicated. The goal is to put the renewal, claims data, stop-loss structure, PBM terms, and vendor roles into a business conversation that leadership can act on.
For Midwest employers and other companies trying to protect margin, the right review should connect benefits to cash flow, retention, fiduciary process, and vendor accountability. Healthcare is not just an HR renewal. It is one of the largest controllable business expenses many employers have.
A Practical Cost-Growth Checklist
Before accepting the next renewal, ask for a short written review that answers these questions:
- How much of the increase is fixed cost, and how much is claim cost?
- Which claim categories changed most over the last 12 to 24 months?
- Which high-cost claims are being managed, and by whom?
- What did pharmacy spend do after rebates, discounts, and PBM fees?
- Are stop-loss terms protecting the plan, or just increasing premium?
- Which vendors were measured against a clear performance standard?
- What decision will we review again 90 days after renewal?
The decision question is this: are you renewing a health plan, or are you managing a healthcare purchasing system?
Book 15 minutes at www.Paul.Health if you want this reviewed against your current plan.