The high-cost environment continues

Healthcare costs continue to increase at high levels year after year

Combined medical and prescription drug trend reached 7.7% in 2025. While the overall trend has become more consistent, it has settled at a higher level than historical ranges.

Employers are now managing several consecutive years of elevated healthcare cost increases, with continued pressure from both medical and pharmacy costs. These high trend levels are projected to persist through 2027.

As these higher trend levels persist, the challenge is not simply managing another year of cost increases. Employers must find ways to manage sustained cost pressure while continuing to invest in their people, remain competitive, and maintain affordable benefits.

WHAT DO “COST PER UNIT” & "UTILIZATION" MEAN?

Healthcare trend measures year-over-year cost changes, which are shaped by both unit cost and utilization. The impact of each provides important context for what is driving the overall increase.

Unit cost reflects changes in the price that is paid for healthcare services and medications, while utilization reflects changes in the amount of care being used.

HISTORICAL TREND

Source: 2026 Lockton Trend Study

What’s currently keeping cost trends elevated?

Healthcare services are becoming more expensive, while employees are continuing to use more care.

2025 TREND
WHAT'S DRIVING IT

MEDICAL

6.4%

Unit cost price & utilization

For the second year, increases in the price of care and the amount of care being used contributed at similar levels. With neither easing significantly, medical trend has remained above 6% for years.

PHARMACY

11.1%

Primarily unit cost price

Brand medications continue to experience double-digit unit cost increases, while GLP-1s contributed 1.8 percentage points to pharmacy trend. Declining utilization for generic and specialty medications helped offset some of the increase.

COMBINED

7.7%

Persistent medical & pharmacy cost pressures

Pharmacy costs are increasing at a higher rate, while medical spending accounts for a larger share of total plan spend. Together, they continue to keep overall trend elevated.

2026 trend data shows cost pressures holding steady at high levels

Employers should prepare for ongoing health plan cost pressures in this new environment of higher trend levels. See the latest data from Lockton’s 2026 Trend Study.

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