2026 Employee Benefits Market Outlook 11 Cell and gene therapiesThese cutting-edge treatments are seeing a record number of approvals in 2025, with several first-in-class therapies entering the market. Whether its cell therapies for blood cancers or gene editing for rare genetic disorders, these innovations promise transformative outcomes but also come with significant cost and logistical challenges. The complexity of these therapies and their unique payment structures add to the challenge. Still, the momentum behind specialty drug innovation shows no signs of slowing, signaling a continued evolution in how health care is delivered in the years ahead. Although specialty medications make up only a small percentage of prescriptions, they comprise a significant amount of total drug spending. A report from the HHS found that around half of drug spending falls under the specialty category, with this number expected to continue to climb. Employers should continue to monitor how specialty drugs will impact their health care spending. Cancer Care Cancer care remains one of the most significant cost drivers for employers due to the growing prevalence of diagnoses and the escalating cost of treatment. Cancer diagnoses are increasing, not just among older adults but also among younger working-age individuals. This means more employees and dependents are entering treatment, often requiring long-term care. New and innovative therapies, including chimeric antigen receptor T-cell therapy, immunotherapies, targeted drugs and personalized medicine, may offer better out- comes but come with high price tags. These treatments can often cost hundreds of thousands of dollars per patient. For smaller employers, plan participants receiving high- cost cancer treatments remain low. However, even a single claim of high-cost treatments can significantly impact the overall spending of group health insurance and disrupt annual health budgets. With more treat- ments entering the workforce and more diagnoses occurring, cancer care will disrupt health care spending in 2026 and beyond. Health Care Labor Costs Labor costs remain the single largest expense in health care, accounting for 56% of hospital expenses, according to the American Hospital Association. Yet the supply of health care workers continues to lag behind growing demand, driven by an aging population, rising utilization, retirements and insufficient new talent entering the field. This workforce shortage is fueling wage inflation and increasing provider costs. When hospitals and health systems spend more on labor, those costs are often passed on through higher reimbursement rates, ulti- mately impacting employer-sponsored health plans and the individuals who rely on them. As labor short- ages are projected to persist through 2026, employers should anticipate continued upward pressure on health care costs. Chronic Health Conditions Chronic conditions remain the dominant driver of U.S. health care spending, accounting for 90% of the nations $4.9 trillion annual health care costs. These chronic conditions include heart disease, stroke, cancer, diabetes, arthritis and obesity. Today, 6 in 10 adults have at least one chronic condition, and more than half of U.S. adults report multiple chronic conditions. Cardiovascular disease alone illustrates the scale of the challenge. The American Heart Association estimates that heart disease and stroke could affect over 60% of older adults in the United States by 2050 and reach $1.8 trillion in related expenses. This estimate suggests that inflation-adjusted costs related to cardiovascular diseases would triple over the coming decades.