AK Webinar Recap | Reviewing Your Healthcare Strategy Ahead of the Cost Curve

In September, Adams Keegan kicked off the fall webinar series with a session dedicated entirely to healthcare: what's driving costs this year, what employers can expect heading into next, and the broker strategies that can help tame what's starting to feel like a runaway cost curve. Host Charles Rodriguez (Vice President, AK Human Capital Advisory) led the conversation alongside Trevor Benitone (Chief Revenue Officer at AK and President of AK Insurance Services) and Brian Evans (Vice President, AK Nashville), joined by benefits experts Amanda Keel (President and Broker at The James Group) and Mima Jovanovic (Vice President at The James Group), who brought a deep look at the marketplace and practical ways employers of every size can respond.

Didn't catch the webinar? You can find the full recording here.

What's driving costs this cycle

Medical costs are projected to climb roughly 14% in aggregate, with about 9% of that coming from medical inflation alone, the rising cost of treatment, hospital services, physician fees, and supplies year over year. Trend varies by region; the South is seeing closer to 14%, while parts of the country like Montana run nearer 10%. Beyond baseline inflation, the biggest pressures are higher utilization (especially behavioral health), specialty and cancer medications, AI-enabled technology as a major capital investment for hospitals and carriers, and an aging workforce.

GLP-1s were the "belle of the ball" this year. With prescriptions like Mounjaro running around $1,000 a month, carriers across the fully insured and level-funded world are adding prior authorization requirements, often requiring a Type 2 diabetes diagnosis for coverage. The long-term hope is that GLP-1s reduce catastrophic claims down the road, but carriers are pricing the high utilization now while those savings haven't yet materialized. Catastrophic claims of $100,000 or more jumped 13% from 2024 to 2025, with next year expected to land just as high.

The shrinking-pool problem

Rising costs are feeding a difficult cycle. As premiums climb, healthy people opt out and only those who truly need coverage stay in, which drives costs higher still. It's visible in the shrinking ACA individual market and in the small-group space, where participation keeps dropping. It's often worse in the large-employer world with hourly workforces, where participation has fallen from 40% to as low as 20% – a level many carriers don't even want to quote. Increasingly, employees are simply deciding they can't afford it, and employers are reaching the limit of how much more they can contribute.

Your broker relationship is the first lever

The message was direct: choosing your broker is one of the most critical decisions you can make, and the goal is a partnership, not a transaction. If you only hear from your broker once a year, that's a red flag. Getting renewal rates just 30 days out was called the "cardinal sin" of a broker relationship. Strong partners are in touch throughout the year with quarterly updates, compliance guidance (ACA, PCORI, Medicare Part D), and early market outreach well ahead of renewal.

Just remember that shopping five brokers doesn't unlock magically better rates. Everyone works from the same data and generally gets the same rates. The value is in the ongoing strategy, communication, and market work, so go out with one good broker and make it a team effort. And while carrier loyalty can help at renewal (especially for groups over 50), a good broker should still be reviewing every carrier option each cycle.

Knowing your workforce and your model

Before turning to plan structure, employers need a clear read on their own workforce and business model. Just because everyone wants free healthcare doesn't mean the business can sustain it. Skipping employee input leads to buyer's remorse: rolling out something like a high-deductible health plan without education can backfire, particularly across blended blue-collar and white-collar teams where cash flow and plan literacy differ. Communication and education are what make a plan land.

Structural options: fully insured, level funded, self-insured

For small groups (50 and under), there are three funding paths. Fully insured offers predictable costs and no health underwriting, but the least flexibility and visibility into claims, and it's conservatively priced. Level funded was the clear favorite for healthy small groups: predictable monthly costs with more flexibility, claims data to drive decisions, built-in reinsurance to protect against a bad year, and the potential for a refund if claims run well. The tradeoff is health underwriting up front. Landing on a level-funded plan is where a healthy group has "won the game", you get some of the protection of a fully insured plan while being underwritten on your own merits. The third option for employers under 51 (who aren't bound by ACA coverage rules) is to exit the group market, potentially using an ICHRA to let employees buy individual coverage with tax-advantaged employer reimbursement, though that carries retention considerations.

For larger groups (roughly 100+), self-insurance unlocks the most flexibility and typically the lowest cost, with stop-loss coverage protecting against catastrophic claims. It's a journey, not a same-day decision, and it requires good claims data – which is exactly what groups coming out of PEO pooled or association plans often lack.

Turning the dials you can control

Beyond funding structure, there are several levers a good broker should be presenting: carrier selection (the biggest regional player isn't always the right fit; sometimes a regional HMO or skinny network works better), network breadth, and plan design. On design, watch the max out-of-pocket, not just the deductible, since that's where insurance truly kicks in. Contribution strategy matters too: HSAs and HRAs can shift spending behavior. Carve-outs (commonly hourly vs. salary) can be a smart way to serve employees who want quality coverage while offering more affordable options to those who won't take a rich plan, though large employers need to watch ACA exposure.

Finally, treat your medical plan like a workers' comp plan, with the same focus on safety, education, and utilization. Encouraging wellness checks, flu shots, telemedicine, urgent care over the ER, and generic drugs genuinely moves the numbers. ER visits were up 2.1% year over year, while virtual visits (often free or low-copay) fell 16.1%, with Gen Z more reluctant to engage than expected. That gap is a tangible, coachable opportunity to reverse a costly trend.

View the webinar recording here and plan for about 45 minutes to fully engage with the discussion.