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Rising healthcare costs is an issue that is vexing American consumers and companies alike. The WSJ Leadership Institute’s Jennifer Williams continues that healthcare conversation in today’s newsletter, taking a look at how companies are trying to blunt the impact of this burden. Jennifer writes in today’s Morning Ledger:
Finance chiefs are used to rising healthcare costs. But late last year, they started talking about more notable increases.
I spoke with Costco Wholesale’s finance chief about this in December. At the time, the company’s healthcare costs had increased more significantly and grew at a faster pace than sales. “We’ve always seen year-over-year increases in healthcare costs, but typically, they're not growing faster than our overall sales growth,” said CFO Gary Millerchip, referring to the three months ended Nov. 23.
Those costs normalized in the three months ended Feb. 15, Millerchip said. “But we’ll continue to watch them closely.”
Here’s what I’ve heard:
Cava Group: The Mediterranean food chain raised employees’ healthcare premiums for the first time in years in 2025 and is now considering covering healthcare costs itself rather than relying on an insurance provider, an option known as self-insurance.
The company’s aim is to provide the same level of care to workers, whether Cava goes the self-insurance route or not, said Chief Financial Officer Tricia Tolivar. “We are not trying to cut the coverage for our team members,” she said.
Ethan Allen: The company’s cost of an injury or illness in the U.S. has gone up considerably in recent years because of higher costs for each claim rather than more of them, according to Matt McNulty, Ethan Allen’s chief financial officer. For instance, the expense of covering a broken arm now is up between 15% and 25% from a couple of years ago, according to the CFO. Overall U.S. costs have risen 10% to 15% over the last several years, he said, declining to provide a dollar amount for the increase.
Efforts to reduce costs without cutting the care offered include safety training, encouraging preventative care and on-site health screenings.
Bigger picture
Many U.S. businesses are grappling with higher expenses to provide health insurance to employees. Costs for employer coverage are expected to surge about 9.5% this year, the biggest increase in at least 15 years, according to an estimate from Aon. They are projected to remain high next year, too.
Key quote: “For CEOs and CFOs, we’re at that tipping point to take significant action,” said Janet Faircloth, senior vice president of health solution thought leadership at Aon.
In fact, some 64% of CFOs and CEOs said an 8% to 10% cost increase is the threshold for making major changes to their coverage offerings, according to an Aon survey of 65 executives early this year. The findings show that executives’ cost tipping point is lower than corporate benefits teams expect, as shown in the chart above.
—Jennifer Williams
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