Why your healthcare cost strategy is failing - and what to do

Employer costs for health benefits in the private sector rose six percent in the 12 months to June 2026 - more than double the 3.1 percent growth in wages and salaries over the same period, according to the Bureau of Labor Statistics (BLS) Employment Cost Index.

Paul Pruitt, founder of SHARx, a specialty pharmacy cost management firm based in St. Louis, Missouri, and a former benefits broker with more than a decade of experience advising employers on group coverage, argues that most organizations are responding to rising costs in ways that will not work – and that the root cause lies not in the benefits plan itself, but in how leadership engages with it.

"If we focus on the cost of insurance, we're looking at the wrong problem," Pruitt told HRD. "The insurance price and what it costs is a function of how it's used, how your members access care. Those are the areas where meaningful impact can actually be made."

GLP-1s are a symptom, not the source

The temptation for HR leaders facing pressure from finance is to cut the most visible cost driver. Right now, that means GLP-1 medications. But Pruitt, who has worked in pharmacy benefit strategy since 2017, argues that removing or restricting GLP-1 coverage treats a symptom rather than a cause – and risks creating new problems.

"GLP-1s are exacerbating an existing problem, not creating a new one," he said. "Medication cost pressure has been building since the mid-2010s. The demand surge was predictable once GLP-1s were repurposed for weight loss."

Employers who cover GLP-1s without a structured program are compounding the problem rather than managing it, Pruitt says. The deeper issue is that obesity and type 2 diabetes share the same root causes in lifestyle, but the healthcare system addresses both primarily by masking symptoms rather than changing behavior.

Removing GLP-1 coverage without a plan risks signaling to employees, particularly those evaluating competing offers, that the organization is pulling back on health support. And GLP-1s will not be the last high-cost drug class HR teams are forced to reckon with. Sleep medications represent the next wave already building, according to Morgan Stanley Research, which projects orexin-based therapies could mirror GLP-1s' market trajectory and reach $16 billion by 2035.

"You can play whack-a-mole with GLP-1s, or the sleep thing, or whatever comes next," Pruitt said. "Or you can plan for it and address all of it more holistically. There's always going to be that next new thing we're freaked out about. We can either respond to it or we can plan for it."

The cost lever HR leaders are missing

Pruitt frames healthcare costs as a function of two variables: utilization and unit cost. Utilization - changing how employees access and use care - is the more desirable lever, but the hardest to pull. Unit cost, specifically the pricing and sourcing of medications, is where the more immediate opportunity lies.

"Changing member behavior is slow and difficult," he said. "Pricing and sourcing of medications can be restructured more immediately. Unit cost is the more actionable lever."

That reframing has direct implications for how HR leaders should be evaluating their vendor relationships. Rather than accepting pharmacy benefit manager (PBM) rebate structures at face value, Pruitt says HR teams should be asking a more fundamental question: do the organization's current partners - its third-party administrator and PBM - actually benefit when employer costs go down?

"A lot of the time they've got partners that are happy with the high claims," he said. "They profit when you don't win. That's a misaligned incentive. Step one is: do you have partners that want you to win?"

For HR leaders seeking additional grounding for these conversations, the Employee Benefit Research Institute (EBRI) and the Kaiser Family Foundation's annual Employer Health Benefits Survey, which tracks employer cost trends and benefit design decisions across the US market. The Society for Human Resource Management (SHRM) also publishes regular employer benchmarking data on healthcare cost-management strategies that can help contextualize the issues with independently sourced data.

The C-suite gap that is stalling progress

This is where Pruitt's argument becomes most pointed for HR leaders and the most uncomfortable. In his experience, the single biggest barrier to meaningful cost reduction is not the vendor landscape or the plan design. It is the absence of a defined target and a clear mandate from finance leadership.

"HR teams will say they want to save money. I ask, 'How much?' They say, 'I don't know.' Well, if you don't know what you're looking for, how do you know when you've found it?"

The problem, as he sees it, is structural. HR departments often enter benefits renewal cycles without a defined savings target or explicit direction from the CFO, which means there is no accountability framework within which to evaluate success or to justify the plan design changes that meaningful savings actually require.

"CFOs and C-suites, until they care enough to have expectation and accountability, you don't see change in a meaningful way," he said. "And many organizations treat high healthcare costs and their downstream consequences - layoffs, hiring freezes, wage stagnation - as unrelated events. They haven't connected the dot that healthcare is the reason those things are happening."

This is the strategic case HR leaders need to make upward, not just to their benefits teams. When the finance function does not set explicit expectations for healthcare cost performance, HR is left managing an open-ended cost with no defined success criteria. The consequences - reduced headcount, suppressed wages, benefit rollbacks - ultimately fall on the workforce, and on HR's ability to attract and retain it.

What HR leaders should be asking right now

Pruitt's diagnostic framework translates directly into questions HR directors and people leaders should be putting to their leadership teams and vendors before the next renewal cycle.

Does the C-suite have a defined healthcare cost reduction target  and has that target been formally communicated to HR? Do the organization's current TPA and PBM partners have incentives aligned with reducing employer costs, or with maintaining them? Is the benefits plan performing its core function of attracting and retaining talent, or is it being preserved out of inertia?

Today, specialty drugs still represent roughly one to two percent of pharmacy volume but account for approximately 60 percent of pharmacy spending, according to a UnitedHealthcare analysis cited in Marsh McLennan Agency's 2026 pharmacy trends report.

"How much of the Rx dollar can specialty take until everyone has to say uncle?" Pruitt said. "The mid-market, the smaller employers, they've been saying it for a while. Now we're seeing it from the biggest companies too."

As for what to now, the message is that the time to make this a C-suite conversation is now, not at the next renewal.