UK and global employers are significantly increasing their investment in preventative health and wellbeing benefits, as new data points to rapidly rising medical costs and a growing mismatch between what organisations provide and what employees say they need.
According to The Changing Face of Employee Health, a new international report from workforce benefits firm Howden Employee Benefits, more than two thirds (67 percent) of businesses globally are now investing in preventative care to mitigate the impact of medical inflation.
In the UK, that figure rises to 72 percent, slightly behind Europe (74 percent) and ahead of Latin America (71 percent), the Pacific region (69 percent), Asia (56 percent) and IMEA (India, Middle East and Africa) at 55 percent. The report draws on research from 441 companies and more than 1,400 employees worldwide, along with data from five global insurers.
Employers are acting as forecasts show medical inflation will reach 7 percent in 2026 after adjusting for consumer price index (CPI), meaning total healthcare inflation will be well over 10 percent in many countries. Nearly all employers surveyed (93 percent) expect their medical costs to rise, and more than 40 percent expect a significant increase. The pressure is especially intense in the IMEA region, where 58 percent of employers anticipate steep cost rises, followed by Asia (52 percent) and Latin America (46 percent).
Rising costs push businesses to reshape health plans
The report found that while most global employers (93 percent) believe their current healthcare plan meets employee needs, and 86 percent believe it delivers a good return on investment, many are still looking to renegotiate or replace existing arrangements.
Almost a quarter (23 percent) of companies have already switched healthcare providers to secure a better deal, and another 39 percent are planning to do so. A further 26 percent said they would consider switching if presented with a more favourable offer. These shifts suggest that while businesses are spending more on health benefits, they are also under growing pressure to demonstrate value and effectiveness.
Despite the increased investment, a notable gap remains between employer intentions and employee perceptions. A quarter of employees surveyed said their employer does not support their wellbeing. This contrasts sharply with the view among leadership that existing packages are effective and fit for purpose.
The report also highlights the strategic shift towards prevention. Of those investing in preventative healthcare, more than half (55 percent) said it was the most effective strategy they had used to manage medical costs. Prevention was favoured over cost-sharing models, benefit cuts or delayed treatment approaches.
Howden’s UK CEO and global health and employee benefits chief, Glenn Thomas, said the pace of change in healthcare was reshaping the workplace benefits landscape. “The findings show how quickly the world is shifting, with AI, new treatments and rising costs reshaping the health and benefits landscape,” he said. “Employers are feeling the pressure. If organisations don’t recognise their people as their greatest asset and address people risks directly, productivity and growth will suffer. A healthy workforce is now the engine of performance.”
He said that while employers often believed they were delivering adequate support, many employees still felt underserved. “What stands out in the data is the gap between what employers believe they’re delivering and what employees say they’re receiving. Healthcare benefits are becoming non-negotiable for talent, yet many workers still feel their needs aren’t being met. It’s no surprise that so many businesses are now looking at substantial changes.”
He urged leadership teams to act quickly, saying they “can’t afford to wait. The pressures highlighted in this report show just how fast things are moving. Benefits must be both cost-effective and genuinely fit for their people.”
Health benefits now a priority for retention and recruitment
The report confirms the growing importance of health benefits in both attracting and retaining staff. Three in five employees (61 percent) said they were more likely to stay with an employer who offers strong healthcare support, and nearly half (47 percent) said it was a key factor when considering a new job. Just 7 percent of workers said healthcare was not an important benefit.
Howden said the findings highlighted the shift in employee expectations, particularly as healthcare becomes more complex and expensive. The company advises that prevention and early intervention not only control costs but also reduce absence and improve performance.
Where demand for private healthcare in the UK has risen in response to NHS backlogs, the trend towards preventative models may also ease some of the longer-term pressure on services. Howden said organisations that fail to adapt their health strategies risk losing talent and facing higher indirect costs related to presenteeism, turnover and disengagement.
