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Melissa Nelson
Vice President, Employee Health & Benefits
Rising healthcare costs remain one of the most persistent challenges employers face today. In 2026, these costs are expected to outpace general inflation again, increasing pressure on budgets, benefits strategies, and employee affordability.
At Marsh McLennan Agency (MMA), we believe effective cost containment isn’t about drastic or disruptive measures. Instead, it’s about understanding every available lever, from plan design and vendor alignment to data-driven risk management, and applying them in the right combination to balance opportunity with stability.
That’s why we developed the MMA Cost Containment Matrix, a framework that evaluates strategies across four key categories: administrative, medical, stop loss, and pharmacy. Each lever offers varying potential savings and levels of disruption. Our goal is to help organizations identify the right sequence of steps to achieve meaningful cost savings without compromising the employee experience.
Below, we highlight two proven strategies from each of the four categories. For each strategy, we outline three key elements to help decision-makers assess fit and feasibility:
- Savings opportunity: the expected financial impact relative to current spend
- Disruption factor: the degree of change your workforce may experience
- Key considerations: important factors employers should evaluate before moving forward
Administrative levers: strengthening the foundation
Administrative strategies form the foundation of every cost containment effort. Before employers tackle complex design or vendor innovations, it’s essential to ensure the fundamentals are efficient and aligned. These levers focus on plan structure, coverage, and how members engage with their benefits.
Often the most accessible entry point for cost containment, administrative strategies may not require redesigning plans or changing carriers but can uncover measurable savings and improve member experience. They also create the data visibility and process discipline that enable other strategies to succeed. Let’s dive into two strategies:
1. Creative strategies to address Medicare-eligible, COBRA, and spousal populations
Some population groups remain on employer-sponsored plans even when more cost-effective options exist, such as Medicare-eligible retirees, COBRA participants, or spouses with other coverage. Redirecting these populations can potentially reduce claims exposure and administrative expenses.
Decision factors:
- Savings opportunity: medium
- Disruption factor: medium
- Key considerations: Communication and education are critical. Transitioning employees to new coverage can be sensitive, so support from experienced benefit counselors helps ensure a smooth, informed process.
2. Plan audits
Plan audits protect the integrity of the plan by ensuring the right people are covered and the right claims are being paid. This includes dependent eligibility audits, care utilization audits, and recovery of improper payments.
- Savings opportunity: medium to high
- Disruption factor: low
- Key considerations: These efforts reclaim dollars already in the system—without adding burden to employees. When done with a compliance-minded vendor, audits may produce meaningful recurring savings and reinforce fairness across the population.
Medical levers: aligning care quality with cost efficiency
Medical cost drivers remain one of the largest parts of an employer’s healthcare spend. For that reason, we have highlighted three strategies instead of two, as employers often need a multi-pronged approach here to materially influence the trend.
Medical levers optimize how care is delivered and consumed, not just reducing spend but directing dollars toward high-quality, evidence-based care that improves outcomes. While these strategies may alter provider choice or benefit design, the return on investment has the potential to be substantial.
1. Care navigation
Care navigation isn’t about restricting provider choice; it's a framework for guiding employees to providers and care settings that consistently deliver high-quality outcomes at lower cost. By actively navigating care through these networks, employers may reduce unnecessary treatment variation, improve clinical outcomes, and enhance the overall member experience.
- Savings opportunity: medium to high
- Disruption factor: medium
- Key considerations: Successful care navigation requires robust communication and education to ensure employees understand the benefits of using high-performing providers. Network adequacy and access must be carefully evaluated to maintain satisfaction and trust.
2. Alternative pricing strategies
These strategies replace traditional negotiated discount rates with payments based on benchmarks. Employers adopting these strategies may see significant reductions in facility claims costs.
- Savings opportunity: high
- Disruption factor: high
- Key considerations: Alternative pricing strategy programs require member education, vendor advocacy, and ongoing monitoring to mitigate balance-billing risks. They’re best suited for employers ready to embrace transparency and a long-term cultural shift.
3. Individual coverage HRAs (ICHRAs)
ICHRAs allow employers to set a fixed contribution and redirect employees to the individual market for coverage, transferring volatility away from the group plan while expanding employee choice.
- Savings opportunity: medium (varies by market and population)
- Disruption factor: medium
- Key considerations: ICHRAs can create long-term budget predictability and reduce exposure to large-claim volatility. Success depends on employee demographics, local plan availability, and a guided enrollment experience that helps members feel supported during the transition.
Stop-loss levers: protecting against volatility.
As healthcare costs rise, so does the volatility of catastrophic claims. Employers, especially self-funded employers, face greater exposure to high-cost claimants and unpredictable renewal rates. Stop-loss coverage is more than a safety net; when managed proactively, it can be a strategic cost-control tool.
Stop-loss levers allow employers to shape how they transfer and manage risk. Whether through pooling mechanisms such as captives or through negotiations on renewal protections, the right approach may reduce cost volatility, enhance predictability, and strengthen financial resilience.
1. Stop-loss captives
Captives allow multiple employers to pool risk and gain scale advantages similar to larger organizations while retaining control over plan design and funding.
- Savings opportunity: medium
- Disruption factor: low
- Key considerations: Captives can reduce fixed premiums and create potential returns through surplus distributions. They require long-term commitment and alignment with like-minded employers.
2. Renewal rate caps and “no new lasers” clauses
These provisions don’t generate immediate savings but protect against unpredictable cost increases or exclusions at renewal, helping maintain budget stability.
- Savings opportunity: medium (savings are realized over time)
- Disruption factor: low
- Key considerations: Employers should negotiate these provisions as part of a comprehensive stop loss strategy, informed by data and supported by professional advocacy.
Pharmacy levers: managing the fastest-growing cost driver
Pharmacy costs, especially specialty drugs, continue to rise faster than any other healthcare expense. Pharmacy management is now essential to sustainable cost control.
Pharmacy levers focus on transparency, contracting efficiency, and capturing external funding to offset costs. These changes often occur behind the scenes, minimizing disruption to employees.
1. PBM carve-out (when it’s the right fit)
When a carve-out is aligned with an employer’s objectives, separating pharmacy benefits from the medical carrier can create opportunities for greater transparency, contractual flexibility, and rebate accountability.
- Savings opportunity: medium to high
- Disruption factor: low
- Key considerations: Carve-outs tend to be most effective when employers are prepared to actively manage PBM performance and demand visibility into pricing, rebates, and specialty utilization. Integration with medical data and ongoing governance are critical to sustaining results.
2. Manufacturer assistance programs
These programs leverage manufacturer funding to offset costs of high-priced medications, particularly specialty drugs, and may deliver significant savings.
- Savings opportunity: Medium to high
- Disruption factor: Low
- Key considerations: Compliance with ERISA and tax regulations is critical. Partnering with experienced vendors helps ensure members access funds appropriately while maintaining plan integrity.
How MMA helps employers thrive
There’s no single lever that solves the cost-containment challenge; the real power lies in understanding how these strategies complement one another. The MMA Cost Containment Matrix helps employers visualize these relationships, prioritize based on impact, and build a roadmap tailored to their goals and tolerance for change.
At MMA, we don’t just react to rising costs; we support employers in leading with purpose. By balancing opportunity with disruption, we partner with you to build benefits strategies that are sustainable, strategic, and designed to support your organization’s success today and into the future.
Download the Solutions Matrix to begin building a cost containment roadmap for your organization.
