By Contributor,Rita Numerof

Copyright forbes

Digital screen concept showing employee benefits.

Employer-sponsored plans are projected to rise 6.5% in 2026, more than twice the rate of inflation. That increase may seem high, but it’s modest compared with the 75% jump marketplace enrollees could face if ACA subsidies expire at year’s end. The contrast underscores the leverage employers already hold on behalf of their employees, and the opportunity for them to drive better deals, greater transparency and improved health outcomes.

Employers haven’t always been in the business of providing healthcare benefits to their employee base, but since they are, they have an opportunity to use their influence to demand greater transparency, accountability and competition in healthcare. If they did this more systematically, they could change the direction of runaway costs and play a role in demanding improved outcomes and lower total cost of care.

The employer-based insurance model emerged during World War II, when wage controls prompted companies to attract workers by offering benefits like health insurance. Later, favorable tax treatment cemented this structure, making employer-sponsored coverage the default for most Americans.

While employers likely did not set out to be healthcare financiers, decades of policy choices seem to have left them in that position, and today they remain the principal negotiators for the majority of working Americans.

Employers are the only collective voice most patients have in a market dominated by powerful intermediaries. Without employer advocacy, individual employees would have little leverage to secure affordable, high-quality coverage. The consequences of lacking leverage are on full display in the individual marketplace, where prices are rapidly rising.

MORE FOR YOU

Some employer coalitions have begun to use that leverage more strategically. By pooling their bargaining power, they are questioning long-standing practices that have driven up costs. For instance, some are beginning to question how pharmacy benefit managers negotiate rebates and structure formularies.

These efforts are not just about lowering spending; they are about reclaiming transparency so that employees understand what they are paying for and why. Employers do not have to accept opaque contracts as the norm. When they act together, they can shift the balance of power toward arrangements that deliver value to employees rather than perpetuate inefficiencies.

Pharmacy benefit managers illustrate the stakes clearly. PBMs present themselves as cost savers, but their incentives often run counter to the interests of both employers and patients. By favoring higher-priced drugs that generate larger rebates, PBMs raise costs while restricting choice, and then tell employers how much they negotiated off the inflated list price.

Some employer groups have begun experimenting with transparent PBM contracts that eliminate spread pricing and pass through rebates directly. These models are still the exception, but they prove alternatives are possible. Employers do not have to wait for Washington to dictate reform. They can use their purchasing power to demand contracts that align incentives with improved employee health outcomes.

Holding PBMs accountable demonstrates that employers can challenge entrenched practices and achieve better results for their workforce.

Employers have another tool too: insisting on better information about cost and quality. Employees cannot make informed decisions about where to seek care if meaningful data is unavailable. Employers should press hospitals and insurers to provide comparative information that allows for true competition.

Encouraging employees to use high-performing hospitals is another lever already available. When employers highlight providers that deliver better outcomes, they enable their workers to get treatment at the best facilities and create incentives for others to improve. The same principle applies to insurance products.

Transparency and competition are not abstract goals. They are the building blocks of a functioning market. Without them, consumers can’t make rational decisions about their own health and costs continue to rise unchecked.

The current system is characterized by opacity, misaligned incentives and limited accountability. On behalf of their employees, employers must remain engaged, both as negotiators and as advocates for systemic reform.

The employer-based model is imperfect, but it remains a central pillar of commercial insurance. Employers did not choose this role, but history placed it upon them. Employers can use their influence now to demand transparency, accountability and competition. By doing so, they can improve outcomes for employees and build momentum toward a system that rewards value rather than inefficiency.

Editorial StandardsReprints & Permissions