If you’re a business leader in Arizona, you’ve likely felt the tremors of rising healthcare costs—and you’re not alone. Across the country, employers are facing the steepest increases in health insurance premiums in over 15 years. The headlines are clear: this isn’t a blip. It’s the new normal. 

At AZ Blue, we’re seeing the data firsthand. More people are getting more care that is more expensive. National industry experts are seeing the same thing. From 2023 to 2026, Price Waterhouse Coopers projects a nearly 38% cumulative increase in national medical costs.  

And while we are all bracing for impact, we’re taking action to help protect our members and employer partners. 

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What’s Driving the Surge in Healthcare Costs? 

The cost spike isn’t just about more people getting care—it’s about how care is delivered, priced, and reimbursed. 

• People are Getting More Care: A post-COVID increase in care is driving volume increases at record levels.  Looking at 2024-2025 commercial large groups, emergency is up 20%, medical Inpatient up 18% and medical office visits up 14%. 

• More Providers Offer More Access: Arizona added nearly 1,800 primary care providers, outpacing population growth. That’s great for access—but it also means 6.5 million more visits to pay for, each with associated labs, imaging, and treatment costs. 

• Higher Prices Across the Board: In just one year, from 2024-2025, hospital revenues are up more than 10%*. Specialty drugs, physician services, and inpatient care are all climbing. Medical breakthroughs are improving lives—but they come with a price tag. 

• Pharmacy Costs Spiked: While overall script utilization is up 2.6%, costs are up 36% and centered squarely on the high cost of GLP-1 and specialty drugs. 

• AI-Driven Billing: Artificial intelligence is helping providers optimize schedules and capture every possible charge. For example, from 2022 to 2024, AZ Blue saw sepsis claims double, yet nearly half lacked treatment consistent with sepsis. That’s not better care—it’s bigger provider billing. 

• Policy Pressures: The federal No Surprises Act was designed to protect patients, but it’s created thousands of disputes between insurers and providers. At AZ Blue, we’re managing 4,000 disputes per month, and seeing providers be awarded payments that are more than 10X the market average. 

• Fraud: Bad actors are on the rise, and are getting smarter, causing waste, abuse and, in some cases, it may be outright theft.  

• Private Equity is Buying Doctors: In Arizona, private-equity firms are expanding ownership of medical practices, often driving up patient costs rather than improving efficiency.   

AZ Blue’s Response: Helping Shield Employers and Members 

In 2024 and 2025, AZ Blue used some of its reserves to absorb over $500 million in unexpected claims—helping shield employers and members from the full brunt of the storm. We’re also: 

• Cutting Waste: To support affordability, we’re on track to remove 10% in administrative costs and are aggressively negotiating provider contracts. 

• Fighting Fraud, Waste, and Abuse: Our efforts have saved $100 million over five years by removing bad actors from the system. 

• Offering Coverage with Care Built-In: Our Prosano Health sites deliver high-value care, reducing ER visits by 37%, acute hospital admissions by 7%, and specialist visits by 35%.** 

• Managing Pharmacy Spend: GLP-1s are below the benchmark for Group and Individual while biosimilars are saving over $8 million in 2025. 

Strategies for Employers to Weather the Storm 

We are seeing a good number of new groups coming to AZ Blue and working closely with our renewal groups to offer the best possible premium with the highest value to members. Our accounts teams are ready with solutions to combat premiums that are reflecting the higher cost of care.  

Here are the top strategies to stay affordable and stay protected. 

1. Move to Coverage with Care Built-In 

The power of AZ Blue plus the power of Prosano Health is where we are seeing a better care experience and some cost control magic. With 10 convenient locations, and $0 healthcare at Prosano Health clinics included in the premium, we see more employers selecting this option. BlueSignature Prosano Standard Group Plan has a Guaranteed 5% Premium Discount compared to similar AZ Blue plans. https://www.azblue.com/prosanoplans 

2. Choose a Performance Network 

Some groups may have the option to choose a smaller, high-quality network that helps lower costs by focusing on doctors and hospitals that give great care at better prices. It also makes it easier for employees to find trusted providers, which can lead to better health and fewer expensive treatments. 

3. Modify Benefits, While Keeping Employees Protected 

Shielding employees from financially devastating medical events is the priority. Raising deductibles can lower premium costs by shifting more upfront expenses to employees, helping employers manage budget pressures without reducing overall coverage. 

4. Strengthen Pharmacy Management  

There are proven methods to spend less on pharmacy and get your employees what they need. While AZ Blue has strategies in place to optimize pharmacy savings, additional formulary controls may be available to ensure medications are clinically appropriate and cost-effective. Better pharmacy management still maintains access to essential treatments while curbing overspending on high-cost drugs, especially in categories like specialty and GLP-1 medications. 

5. Encourage Employees with Chronic Conditions to Sign Up for AZ Blue Health Management 

AZ Blue’s Health Management Program offers personalized, no-cost support for chronic conditions like diabetes, asthma, and heart disease—empowering members with coaching, care coordination, and tools to manage their health confidently. And it’s already included at no extra cost. 

6. Help Employees Manage Their Costs 

Knowing where to get care is crucial for both your health and your wallet. Choosing in-network providers and the right site of care, such as urgent care versus the emergency room, can help members receive appropriate treatment more quickly and at a lower cost. AZ Blue has a suite of communications, and new search features that help members choose quality care and better value.  

The Bottom Line for Business Leaders 

Healthcare costs are rising—and fast. With the right partner, you don’t have to face it alone. AZ Blue is built for moments like this: resilient, proactive, and committed to keeping people covered, and doing everything we can to manage costs. 

As we look toward 2026, the challenges are real—but so is our resolve. We’re standing with Arizona businesses to help protect their bottom line and help people stay covered. Together, we can keep people covered, businesses strong, and our communities thriving. 

Contact your AZ Blue team for assistance. More at https://www.azbluefacts.com/staycovered. 

* Non-public hospitals 2023-2024, Nephron Investment Healthcare Research, August 14, 2025 

**2024 Group Members who go to Prosano Health Providers for healthcare and navigation compared to group members who go to other providers 

Author: Joe Greenberg is Chief Operating Officer for AZ Blue.