HCCI data shows rising prices, not employee overuse, are driving employer health costs
The single biggest driver of rising employer health costs between 2019 and 2023 was not employees overusing care. It was the price of that care.
Rising prices accounted for 90 percent of the nearly 19 percent increase in per-person health spending over that five-year period, according to newly published research from the Health Care Cost Institute (HCCI). The 2023 Health Care Cost and Utilization Report, released October 13, 2026, and based on claims data covering the period from 2019 through 2023, gives the clearest picture yet of what has been inflating health plan budgets and where the real leverage lies.
"Employers are at the front lines of cost containment," said Katie Martin, president and chief executive of HCCI, based in Washington, D.C. "It's their negotiation, their direct negotiation with providers, that has the greatest opportunity to bring costs down."
The numbers HR leaders need to know
HCCI's flagship annual report, now in its 15th year and drawing on one of the largest commercial claims databases in the United States, found that rising prices accounted for $959 of the $1,068 increase in per-person spending between 2019 and 2023. Per-person spending reached $6,743 by the end of the study period, up from $5,676 in 2019.
Utilization - the actual volume of care employees used - grew by just 1.8 percent over the same five years.
The data covers Americans under 65 with employer-sponsored insurance (ESI), approximately half the US population, and was weighted to reflect the national ESI population by age, sex, and geography.
Gross prescription drug prices rose 33 percent over the study period, the sharpest increase of any service category. Inpatient, outpatient, and professional services prices all exceeded 10 percent growth. In the final year of the study period alone (from 2022 to 2023) overall per-person spending grew 6.5 percent, driven entirely by price increases while utilization was essentially flat.
That trajectory has continued beyond the study period. According to the Kaiser Family Foundation's (KFF) 2025 Employer Health Benefits Survey, published in October 2025, annual premiums for employer-sponsored family health coverage reached $26,993 in 2025 - 6 percent higher than in 2024. KFF projected a further 6.5 percent increase for 2026.
The HCCI data documents not a historical curiosity but the foundation of a cost pressure that shows no sign of easing and reinforces what HCCI has documented across more than a decade of research.
"In each report, we found that it's prices, not use, that drives healthcare costs," Martin said. "The only real decline we've seen in healthcare spending over the past decade or so was the two to three months directly around COVID. And what's more remarkable than the dip is the speed with which it returned to its previous trajectory."
What this means for plan design
The price-not-utilization finding has a direct implication for plan design strategy: programs aimed at reducing how often employees use care will not, on their own, bend the cost curve. The lever that matters is what the plan is actually paying per service.
That means HR and benefits teams need to move beyond passive plan management and into active price scrutiny. Martin urged employers to engage in direct negotiation with providers on price and to examine what they are actually paying for each service their employees receive. "You can't really ignore the prices anymore," she said.
One area where price scrutiny is particularly urgent is site of care. The same service delivered in a hospital outpatient department consistently costs more than the same service in a physician's office - a gap the HCCI data shows widened between 2019 and 2023 as hospital systems accelerated their acquisition of physician practices. New EBRI research quantifies that disparity at $12.7 billion in avoidable annual spending across employment-based health plans - approximately $101 per covered member per year.
"The cost for the same service provided in the hospital outpatient department is always higher than in a physician's office," Martin said. "With acquisitions, it just seems like hospital outpatient departments are really growing and they're absorbing more and more care."
Another pricing pressure point is the pharmacy benefit. The HCCI report shows that gross prescription drug prices rose 33 percent between 2019 and 2023, and that brand-name drugs - representing just 14 percent of prescriptions filled - drove 86 percent of gross drug spending. Generic drug prices, by contrast, fell 14 percent over the same period. Understanding whether your PBM is genuinely working in your organization's interest is now a fiduciary question, not just a procurement one.
The GLP-1 decision every HR team is facing
No line item in the 2019–2023 data generates more difficult conversations in HR and finance than glucagon-like peptide-1 (GLP-1) medications.
Gross spending on GLP-1 drugs grew more than fourfold from $45 per person per year in 2019 to $197 in 2023, making them the fastest-growing subcategory within prescription drugs and representing approximately 12 percent of total gross drug spend per person by the end of the study period.
After accounting for estimated rebates, which can sometimes exceed 50 percent of gross cost for GLP-1s, net spending grew more modestly, from $20 per person in 2019 to $93 in 2023. But utilization grew sharply: population-level use of GLP-1 drugs grew from 54 months' supply per 1,000 enrollees in 2019 to 204 months' supply per 1,000 enrollees in 2023.
Since the study period closed, the GLP-1 landscape has shifted further. Martin noted that these medications are now widely available through compounding pharmacies and direct-to-consumer apps outside the health insurance system - a channel the HCCI data does not capture - and said she suspects that parallel market may be influencing some employers' coverage pullback decisions in 2026.
"I wonder if that's contributing to employers' willingness to pull back some, because they know that folks can get them other ways," Martin said. "I'm always reticent to encourage folks to pull back, but I think continuing to examine what we're getting in return - are they working, how is adherence going - is important."
The GLP-1 coverage decision is increasingly a workforce health strategy question, not simply a pharmacy spend question. Data from Sun Life US connects GLP-1 coverage decisions directly to catastrophic claim risk - high-dollar claims that include GLP-1s increased 24 percent in a single year, while hepatic liver disease spend, one of the conditions GLP-1s can help prevent, climbed 43 percent year-over-year.
The out-of-pocket burden your employees are carrying
Average out-of-pocket spending reached $923 per person in 2023 - a 10 percent increase from 2019, though lower than the 19 percent rise in total spending over the same period.
Professional services - physician visits and related clinician care - consistently accounted for close to half of all out-of-pocket spending across the five-year study period.
Martin cautioned that rising cost-sharing is most dangerous when it discourages employees from seeking routine care. When employees skip doctor visits, defer prescription refills, or avoid recommended imaging because of cost, the deferred spending does not disappear — it resurfaces as higher-cost acute or emergency care later in the plan year, or in the next one.
Martin illustrated the navigation problem with a personal account. Her son was referred for an X-ray following a sports injury. The imaging facility was co-located at a hospital outpatient department.
"The minute we crossed the threshold, we were being admitted to the hospital," she said. "He was in the X-ray room for 37 seconds, and I walked away with a $400 X-ray bill because my plan doesn't cover imaging at hospital outpatient facilities."
Martin runs an organization that studies healthcare costs for a living. The point she draws from the experience is not about her own situation, it is about what this means for every employee on your plan who has less context, less time, and less financial cushion than she did.
A survey by the Pew Research Center, released in May 2026, found that 73 percent of Americans identified the affordability of healthcare as a very big problem for the country - the highest-ranked economic concern among respondents. That finding lands differently when you are the HR director responsible for the plan design choices that shape how those costs fall on your workforce.
Where to focus for the 2027 plan year
While the HCCI report's findings are grounded in claims data through 2023, Martin identified several trends already visible in that period that she expects to intensify in the years ahead including in the 2027 plan year now entering renewal discussions.
Hospital outpatient department growth is chief among them, for the reasons already outlined. Administered drugs - injectables and infusions billed through the medical benefit rather than the pharmacy benefit, including cancer treatments such as pembrolizumab (Keytruda) - are a parallel concern flagged by John Hargraves, a senior researcher at HCCI in Washington, D.C. Prices for administered drugs in the professional services category grew 54 percent from 2019 to 2023, the largest price increase of any professional services subcategory in the HCCI dataset.
The consistent thread running through the HCCI data is that price, not employee behavior, is the primary driver of cost growth. That reframes where intervention is most likely to deliver results: in plan design, in provider contracting, in PBM oversight, and in site-of-care strategy - not in benefit cuts that shift costs to employees without addressing the underlying price problem.
"It really tells them that they need to look at the price that they're paying," Martin said. "Employers have to really engage with the one-on-one negotiation."
The full HCCI 2023 Health Care Cost and Utilization Report, including downloadable data tables, is available at healthcostinstitute.org.
