Benefits executives at Gallagher expect the cost of stop-loss insurance to rise faster than the cost of fully insured group health coverage next year.
William Ziebell, the chief executive officer of the insurance broker’s benefits and human resources consulting division, predicted Thursday that typical increases for stop-loss insurance will be somewhere in the mid-teens or higher.
That will compare with increases in the “higher single digits” for medical coverage and increases in the “lower double digits” for prescription drug coverage, Ziebell said.
Hospital workforce shortages, health care provider consolidation and increased patient use of very expensive drugs are all driving the underlying cost of care higher, he said.
“For stop-loss,” Ziebell said, “all of these trends are magnified.”
He thinks one reason that stop-loss prices are rising faster is the Affordable Care Act provision that prohibits employer plans from imposing annual or lifetime limits on coverage for what the law classifies as essential health benefits.
“We’re seeing an increase in large claimants — $2 million, $3 million claims,” Ziebell said. “They’re way up.”
Ziebell spoke at a meeting Gallagher organized for its investors.
The Rolling Meadows, an Illinois-based insurance, risk management and consulting firm streamed the meeting live and posted a recording on its website.
What it means: Some benefits advisors could find themselves in the unusual position of helping clients hold costs down by returning to the market for fully insured group health coverage.
The economic backdrop: In spite of worries about tariffs, inflation and hiring, at this point, the state of the U.S. economy still looks strong, Ziebell said.
“The labor market remains resilient,” he said.
Although some Gallagher clients are now focusing more on retaining employees and holding down health benefits costs than on attracting new employees, “talent remains the top priority for most organizations,” Ziebell said.
The benefits backdrop: Other benefits market players have been making predictions similar to Ziebell’s forecast.
Aegis Risk, a stop-loss consulting firm, suggested in a recent report on an employer survey sponsored by the International Society of Certified Employee Benefit Specialists that many employers could face stop-loss renewal quotes of 20% or higher.
The Business Group on Health said in August that the employers it surveyed estimated that their health care costs could increase 9% in 2026.
The self-insurance strategy: In spite of the big increases in stop-loss prices, Gallagher consultants continue to have many tools they can use to help employers that self-insure hold costs down, Ziebell said.
“We can find point solutions,” Ziebell said. “We have a couple of things we’re doing out there to help get some of the large claimants off of the health plan, finding better coverage maybe outside of the employer-sponsored plan, things of that nature.”