Sustaining Profitability and Health Outcomes Despite Rising Costs of Care

Health care costs in the United States are becoming increasingly expensive — and the trend shows no signs of slowing down. For decades, premiums and out-of-pocket costs have climbed faster than wages and inflation, leaving families, employers and government programs struggling to keep up. As we look ahead to 2026, new data and insurer filings reveal that health insurance affordability is one of the nation’s most pressing financial and social challenges.  

Medicare, Marketplace and employer plans: All going up

Medicare costs: In 2026, Medicare Part B premiums are projected to rise 11.6% to $206.50 per month, while deductibles are set to increase by 11.2%. These hikes could swallow nearly 40% of the typical Social Security cost-of-living adjustment (COLA), eroding retirees’ financial security.

ACA marketplace plans: For 2026, insurers on the Affordable Care Act (ACA) marketplaces are proposing a median premium increase of 15%, the largest in nearly a decade. Some states face extreme spikes — premiums in New York could rise by 66.4%, while Colorado may see increases above 30%.

Employer-sponsored insurance: Employers, who cover nearly half of Americans, are also preparing for steep hikes. Average health benefit costs per employee are expected to increase 5.8% in 2025, with PwC projecting even higher medical trend growth in 2026: 8.5% for group plans and 7.5% for individual plans.

Why are costs rising?

Several forces are driving these increases:

Prescription costs: New high-cost medications, especially GLP-1 drugs for weight loss and diabetes, are straining insurers and driving premiums higher.

Inflation and wages: Healthcare providers face higher operating costs from wages, real estate and supply chains. These pressures are passed directly to consumers.

Market concentration: Fewer insurers dominate many markets, reducing competition and allowing premiums to rise unchecked.

Administrative overhead: Private insurance in particular carries heavy non-medical costs, with administrative expenses consuming around 12% of premiums.

Policy uncertainty: Without Congressional action to extend ACA subsidies, millions could lose coverage, worsening the risk pool and further driving up premiums.

4 ways plans can control their costs

While health plans can’t single-handedly control the rising costs of healthcare, they do have meaningful opportunities to optimize and sustain profitability. Streamlined processes, automated data aggregation and better coordination across teams are just a few ways health plans can save dollars without eating away profits, and Healthmine can help.

1. Standardize processes that lower administrative overhead  

Reduce variability, duplication and errors in workflows, minimizing rework and lowering administrative costs. As a bonus, you’ll reduce member abrasion and improve engagement too. Healthmine’s consulting team has experience guiding health plans with process improvement/redesign and standardizing operational procedures throughout organizations.  

2. Automate to lessen workload burden

Look for opportunities to reduce frequent and manual tasks that automated tools can do instead, freeing teams up to work on higher-level tasks. This includes tasks like automating survey data entry and automating member communications — two tasks Healthmine’s platform Quality Relationship Management™ (QRM®) excels at. With this platform, health plans can collect, aggregate, analyze and action member data from one place and with less manual work.  

3. Assess vendor partnerships to streamline efforts  

Another way health plans can achieve savings is through a critical look at vendor contract negotiations and actuarial risk modeling.  

Because Healthmine isn’t just another point solution, the platform offers more robust functionality than most. Many of our plan partners have been able to work towards offloading redundancies once they’re fully integrated into QRM®, especially for channel-specific vendors like texting and IVR.  

When renegotiating or evaluating vendor contracts to reduce vendor sprawl, our consulting team can handle the heavy lifting, so your teams don’t have to, saving you time and money.

4. Coordinate across teams for greater efficiency

We always urge health plans to prioritize cross-functional collaboration in member engagement, especially among quality and risk teams that have similar goals but often don’t share tools, budgets or timelines.

For success in Star Ratings, CAHPS, HEDIS and HOS, and continued financial stability, payers should consider their outreach strategies and seek consolidation when appropriate. Both quality and risk teams rely on members completing provider visits early in the year, being accurately coded and administering rewards programs that drive action. With the right coordination, these efforts can be unified into a single, efficient approach that saves time, costs in outreach and expedites gap closure.  

Healthmine is already bringing teams together with the right tools and member outreach templates to drive action quickly and close care gaps both teams need completed. Explore an interactive experience of our patient scheduling feature that connects members to care faster.

Pave a path to financial stability

As healthcare costs show no sign of slowing their increase, it’s vital for payers to find new ways to control operational and administrative costs that also help move the needle on performance. Strategic cost management is not only essential for safeguarding the long-term financial health of the plan, but also for delivering greater outcomes and satisfaction to members. Contact us to learn more about how we can help through consulting and technology support.