Healthcare Costs as a Workforce Crisis: Why Employers Must Act Now

Dr. Kristin Tugman

Healthcare costs in the United States have reached a crisis point for both employees and employers. Premiums, out-of-pocket expenses, and disability-related costs are rising at unsustainable rates, threatening not only financial stability but also workforce health and productivity. According to KFF, ACA Marketplace premiums could more than double next year if enhanced tax credits expire. At the same time, employer-sponsored healthcare costs are projected to rise 8.4% in 2026, the steepest increase in over a decade.

This is not a hidden burden—it is a systemic crisis that directly impacts health outcomes, absenteeism, and disability claims. Employers must act decisively to mitigate these pressures through transitional return-to-work (RTW) and stay-at-work (SAW) programs, preventive health and wellness initiatives, point solutions that augment traditional healthcare coverage, and supportive workplace policies that empower employees to use these resources.

The Drivers of Rising Healthcare Costs

The 2026 Benefits Cost Trends Report identifies several forces behind escalating costs:

• Medical inflation: Hospital services, specialty drugs, and advanced treatments are outpacing wage growth.

• Chronic disease prevalence: Diabetes, cardiovascular disease, and mental health conditions are increasing, requiring costly long-term management.

• Delayed care: Nearly half of U.S. adults report skipping or delaying care due to affordability, leading to higher acuity and expensive emergency interventions.

• Administrative complexity: Regulatory compliance and fragmented care delivery add overhead.

The 2026 Workplace Forecast warns that healthcare costs will continue to rise 6–8% annually through 2028, straining employer budgets and employee wallets.

The Workforce Impact: Health Outcomes and Disability Costs

Rising healthcare costs are not just financial—they are productivity disruptors. Kaiser Permanente notes that untreated or poorly managed health conditions drive unscheduled absences and presenteeism, costing employers billions annually.

• Absenteeism: Employees miss work due to untreated conditions, disrupting operations and increasing overtime costs.

• Presenteeism: Workers show up but underperform due to unmanaged health issues, often costing more than absenteeism.

• Disability claims: Delayed care prolongs recovery, increasing both short-term and long-term disability durations.

• Retention risks: With healthcare benefits ranking as a top employment factor, employees are more likely to leave for better coverage.

The Business Case for RTW and SAW Programs highlights that disability benefits alone cost U.S. employers over $100 billion annually, much of which is preventable.

Employer Solutions: Mitigating the Crisis

Forward-thinking employers are adopting strategies that balance cost control with workforce well-being.

1. Transitional Return-to-Work (RTW) Programs

Employees recovering from illness or injury often face barriers to resuming full duties. Transitional RTW programs allow for modified schedules, lighter workloads, or alternative tasks during recovery.

• Impact: Shortens disability durations by 20–40%, saving thousands per claim.

• Benefit: Maintains employee engagement and supports gradual reintegration.

2. Stay-at-Work (SAW) Initiatives

SAW programs are designed to keep employees with emerging health conditions on the job rather than moving directly to disability leave.

• Examples: Ergonomic adjustments, flexible scheduling, or temporary reassignment.

• Impact: Prevents unnecessary disability claims, saving $5,000–$10,000 per avoided case.

• Benefit: Preserves institutional knowledge and demonstrates employer commitment to employee well-being.

3. Preventive Health and Wellness Programs

Preventive care is the most cost-effective intervention. Employers can negotiate health plans that emphasize screenings, chronic disease management, and mental health services.

• Impact: Preventive screenings cost $200–$400, compared to thousands for late-stage interventions.

• Benefit: Reduces long-term costs by catching issues early and decreases unscheduled absences.

4. Point Solutions to Augment Traditional Healthcare

Point solutions—specialized programs targeting specific health needs—are critical in breaking the cycle of delayed care and worsening outcomes.

• Chronic disease management apps: Real-time monitoring and coaching for diabetes, hypertension, and asthma.

• Mental health platforms: On-demand counseling and resilience training, reducing absenteeism by 25–30%.

• Musculoskeletal care programs: Virtual physical therapy that reduces surgical claims by up to 50%, saving $7,000–$10,000 per case.

• Women’s health solutions: Addressing maternity, fertility, and menopause care, reducing attrition among working mothers.

These solutions deliver measurable ROI while improving accessibility and engagement.

Creating a Supportive Work Environment

Even the best-designed programs fail if employees feel discouraged or unable to use them. Employers must create a work environment that empowers employees to utilize health and well-being solutions through supportive policy and practice:

• Normalize utilization: Encourage employees to take advantage of preventive care, wellness programs, and point solutions without stigma.

• Flexible policies: Offer time off for medical appointments, flexible scheduling for therapy, and transitional duties to facilitate stay and work and return to work.

• Leadership modeling: Executives and managers should visibly engage with wellness initiatives to signal organizational commitment.

• Clear communication: Provide transparent, accessible information about available resources and how to use them.

• Integration with culture: Embed health and well-being into organizational values, making it part of performance and engagement strategies.

By fostering a supportive environment, employers ensure that investments in RTW, SAW, preventive care, and point solutions translate into real-world impact.

The Strategic Imperative

Healthcare costs are destabilizing the workforce. Employers who treat this as a crisis issue and deploy RTW, SAW, preventive health programs, point solutions, and supportive workplace policies will:

• Reduce direct healthcare and disability costs

• Protect productivity by minimizing absenteeism and presenteeism

• Strengthen retention through meaningful healthcare support

• Build resilience in the face of systemic healthcare inflation

Closing Thought

The healthcare crisis is here, and its impact on workforce productivity is undeniable. Employers cannot afford to wait for costs to stabilize; they must act now. By embracing a comprehensive health and productivity strategy that includes transitional return-to-work and stay-at-work programs, preventive health and wellness initiatives, point solutions, and supportive workplace policies, organizations can safeguard both their people and their bottom line.

 Sources

1. KFF – ACA Marketplace Premium Payments Would More than Double on Average Next Year if Enhanced Premium Tax Credits Expire

2. Healthcare Costs Set to Rise 8.4%: What HR Need to Know Now

3. 2026 Benefits Cost Trends Report

4. Guiding Your Workforce Through the Impact of Rising Healthcare Costs

5. 2026 Workplace Forecast

6. Kaiser Permanente – Addressing Workplace Absenteeism

7. The Business Case for Return-to-Work (RTW) and Stay-at-Work (SAW) Programs