Rising prices, not increased use of medical services, accounted for 90 percent of the nearly 19 percent rise in per-person employer health spending between 2019 and 2023, 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 five-year period from 2019 through 2023, offers a comprehensive analysis of what drove group health costs higher for US employers and their workers during that period and its findings carry direct implications for benefits brokers advising plan sponsors today.
Katie Martin, president and chief executive of HCCI, based in Washington, D.C., joined Insurance Business Benefits US to walk us through the findings of the new report.
"Employers are at the front lines of cost containment," she said "It's their negotiation, their direct negotiation with providers, that has the greatest opportunity to bring costs down."
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 (90 percent) 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, by contrast, 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, though that figure does not account for manufacturer rebates. 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 a 6.7 percent rise in average prices, while utilization was essentially flat.
The trajectory documented in the HCCI data has not eased since the study period closed. 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 report's 2019–2023 findings document the foundation of a cost pressure that has continued to build in the years since and its latest findings reinforce what HCCI has documented across more than a decade of annual 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."
For benefits brokers advising employer clients, the implication is that utilization management programs alone will not bend the cost curve. Martin urged employers to engage in direct, one-on-one negotiation with providers on price and to scrutinize what they are actually paying for the services their employees receive. "You can't really ignore the prices anymore," she said.
Perhaps no single line item in the 2019–2023 data draws more attention from plan sponsors 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, according to the HCCI report, 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 for GLP-1s can sometimes exceed 50 percent of gross cost, net spending grew more modestly, from $20 per person in 2019 to $93 in 2023. Population-level utilization 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, with obesity-indicated use rising from near-zero to 10 percent of total GLP-1 utilization over that period.
Since the report's 2023 data cutoff, the GLP-1 landscape has shifted considerably. 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 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."
IBB also spoke with John Hargraves, a senior researcher at HCCI in Washington, D.C., who pointed to administered drugs more broadly - including cancer treatments such as pembrolizumab (Keytruda), the top-spending drug administered in physician offices - as an area where the combination of price and expanding clinical indications drove outsized cost growth during the study period.
"With Keytruda, more and more types of cancers are being treated by it, and it seems to have effectiveness in that," Hargraves said. "So it's not always the price, but a combination of price and utilization that leads to extremely high spending."
The HCCI report also highlights a stark disparity between brand and generic drugs across the study period. Generic medications accounted for 84 percent of prescription drug utilization in 2023 but only 12 percent of gross spending. Brand-name drugs, representing just 14 percent of utilization, drove 86 percent of gross spending. From 2019 to 2023, the point-of-sale price of a 30-day supply of brand-name drugs rose 59 percent, while generic drug prices fell 14 percent.
"Generic drugs make up 84 percent of prescription drug use, but 86 percent of overall spending is on brand-name drugs, and the price of generics continues to go down," Martin said. "It just makes you believe that there has to be a way that we can get people the medication they need at a more affordable cost."
The cost of specialty drugs is the focus of a recent report from the Employee Benefit Research Institute, covered by IBB.
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, evaluation and management encounters, 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: regular doctor visits, imaging, and prescription drugs. Hospital inpatient stays, by contrast, tend to be less price-sensitive in practice because patients facing a serious medical event have little real ability to defer.
The HCCI data also underscores how poorly equipped even informed consumers can be when navigating cost differences at the point of care - a dynamic Martin illustrated with a personal account from outside the study period.
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," Martin 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."
The anecdote reflects a structural problem visible throughout the HCCI data, that the same service delivered in a hospital outpatient department consistently costs more than the same service in a physician's office - and that gap widened across the 2019–2023 period as hospital acquisitions of physician practices accelerated.
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. The HCCI report cites the same survey in framing the urgency of its findings.
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, including in the 2027 plan year now entering employer renewal discussions.
Chief among them is the continued growth of hospital outpatient departments. As hospital systems have acquired more physician practices in recent years, more care has been reclassified and billed at facility rates rather than lower professional rates, raising per-service costs without any change in the underlying care delivered.
"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."
Hargraves flagged administered drugs - injectables and infusions billed through the medical benefit rather than the pharmacy benefit - as a parallel concern. 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.
For benefits brokers, Martin's advice is consistent with what the data showed across the five-year study period: focus on the price. Help employer clients understand what they are actually paying for each service, push for direct contracting where possible, and scrutinize pharmacy benefit manager (PBM) arrangements - particularly the widening gap between brand and generic pricing.
"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.
