Healthcare benefits benchmarking compares an employer’s health plan costs and performance against relevant peer groups. Effective benchmarking goes beyond total cost per member by accounting for factors such as geography, plan design, population health risk, unit costs, utilization, and high-cost claimants.
Every insurance organization and benefits consultant knows the annual benchmarking ritual. The report arrives. The numbers get reviewed. A conclusion gets reached. And most of the time, that conclusion is wrong.
At Summit 2026, Nauman Shaikh, VP of Actuarial and Analytics at OneDigital, made a case that most employer health benefit benchmarks are not just incomplete, they are actively misleading. The problem is not a lack of data. It is the way comparisons are built, the assumptions baked into peer cohorts, and the metrics that never make it into the analysis at all.
The stakes are significant. Healthcare is the second-largest operating expense for most US employers, behind wages only. It represents roughly 65 to 70 percent of total employee benefits cost and approximately 10 percent of total wages. And right now, it is trending in a direction that most organizations have not accounted for.
The budget gap no one is talking about
In 2026, healthcare costs are trending at nine to ten percent annually. Historical norms ran closer to five to six percent. Most employers are budgeting four percent. The gap between what organizations plan for and what they actually pay is not a rounding error. It is a structural problem, and benchmarking done poorly is one of the reasons it keeps widening.
Shaikh walked through the five forces driving the current trend. Specialty pharmacy costs, including GLP-1s, gene therapies, and cell therapies, now represent 50 percent of total pharmacy spend. A post-pandemic rise in chronic conditions, including obesity and behavioral health, is compounding the problem. Delayed-care rebound from COVID continues to add claims volume. Provider consolidation has reduced plan sponsor leverage in contract negotiations. And baseline medical inflation has not moderated the way many expected.
Each of these is measurable. None of them surface correctly in a raw benchmark comparison.
Why the wrong healthcare benchmark can lead to the wrong decision
Shaikh opened with a story that illustrated the risk clearly. A CFO at a 3,000-employee manufacturing company had walked into a meeting convinced his plan had a problem. His benchmark report showed healthcare costs running 22 percent above benchmark on a per-member, per-month basis. His instruction was straightforward: fix it.
What followed was a risk adjustment analysis that accounted for the company’s geography, plan design, healthcare morbidity scores, and chronic condition prevalence. Once those factors were normalized, the company was actually performing four percent better than benchmark. The CFO had been on the verge of cutting health benefits for 3,000 employees based on a comparison that was never apples to apples.
That is not an edge case. It is a pattern.
What the comparison actually needs to include
The core problem with most benchmarking is peer cohort selection. Comparing a manufacturing employer with an aged, high-morbidity workforce to a general market average produces a distorted picture in both directions. A meaningful benchmark has to reflect what the plan would cost among employers with genuinely similar populations, accounting for geography, plan design, member risk scores, and clinical complexity.
Beyond cohort selection, Shaikh identified unit cost as the dominant driver of healthcare expense growth right now. Understanding what a plan is paying for inpatient, outpatient, and professional services, measured against Medicare prices, cash prices, and carrier contract rates, is more critical than ever. Utilization patterns and the shift in mix toward higher-acuity services compound the problem. Tracking all three together produces a significantly more accurate performance story than total cost per member alone.
The third gap is tail risk. Two rules define the reality of self-funded plan exposure: five percent of members drive 50 percent of plan cost, and 20 percent drive 80 percent. Plans that track high-cost claimant cohorts and build intervention protocols around them operate differently than those that wait for the annual renewal to surface the problem.
Benchmarking only works if it drives decisions
Shaikh was direct about where the process most often breaks down. Benchmarking becomes a reporting exercise rather than a decision-making tool. The report lands, gets reviewed, and sits.
Three decisions should follow a rigorous benchmarking process. The first is funding strategy. “If you’re an employer in the US, you are in the business of healthcare, like it or not,” Shaikh told the Summit audience. The structure of how a plan is funded determines how much operational control the employer retains. The market continues to move toward self-funding precisely because it creates leverage that fully insured arrangements cannot match.
Vendor and network strategy is the second. When benchmarking exposes unit cost variances by service category, the next step is evaluating whether current network contracts are producing competitive pricing. Transparency data and reference-based pricing analyses become essential inputs to that conversation.
Pharmacy strategy is the third, and it is increasingly urgent. Given that specialty pharmacy is trending faster than medical, GLP-1 exposure, biosimilar adoption rates, and specialty penetration are metrics that every plan sponsor should be tracking by name, not buried in aggregate pharmacy cost numbers.
The shift from retrospective to predictive
The annual benchmark review is an outdated model. Shaikh described the capabilities that forward-thinking benefit consultants are already building into their practices: real-time dashboards replacing static reports, AI-flagged high-cost claimant alerts that identify exposure weeks before claims materialize, micro-cohort analytics tracking specific high-cost conditions, and anomaly detection that surfaces billing irregularities and clinical outliers automatically.
The shift is from explaining the past to anticipating the future. Shaikh’s closing challenge was direct: are you benchmarking metrics that tell the future story, or only the past? Are you separating what a plan has inherited from what it can actually control?
Employers who are asking those questions are already asking them. The question is whether their consultants are equipped to answer.
Interested in more insights from Summit 2026? Explore additional session takeaways and join the conversation as we look ahead to our next Summit.
Looking to strengthen your employee benefits strategy? Learn how ReSource Pro’s employee benefits solutions can help your organization benchmark smarter, manage cost, and make decisions that hold.
