As Arizona employers prepare for the 2027 healthcare renewal cycle, they must handle a full-on storm of pressures in the system, not just one piece of care.
Rising medical utilization, specialty drug inflation, behavioral health demand, and an ever-tighter regulatory environment are pushing trend lines higher.
“In contrast to prior renewal cycles when most employers were still recovering from the post‑pandemic rebound in deferred care and utilization, we view this upward trend as a more structural issue,” says John Byrnes, Banner | Aetna’s chief operating executive.
Pete Chuchro, Cigna Healthcare’s market growth leader, also sees the same trend.
“Looking ahead to 2027, employers can expect continued pressure from higher hospital and physician costs, continuing pharmacy inflation on top of specialty medications, and more utilization tied to chronic conditions and behavioral health needs,” he says.
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Joe Greenberg, chief operating officer for Blue Cross Blue Shield of Arizona, says employers are confronting a broader mix of long-term cost pressures than they faced during the last two renewal cycles.
“Employers are no longer dealing with just temporary factors like post-pandemic care or inflation,” Greenberg says. “They are facing a broader, more complex set of long-term cost drivers, all happening at the same time.”
Among those pressures are increased healthcare utilization, higher provider reimbursement, specialty drug costs, medical advances and regulatory changes. Greenberg points to Arizona’s unusually high volume of disputes under the federal No Surprises Act, noting that providers prevail in more than 80% of cases and that the process has contributed to higher costs throughout the system.
Demand for care is also increasing. According to AZ Blue data, emergency department utilization among large commercial groups rose 20% from 2024 to 2025, while inpatient admissions increased 18% and office visits climbed 14%.
Beyond rising premiums
What’s different about the last two renewals is that pressure is no longer isolated. It is showing up across the system. Heather Kane, CEO of UnitedHealthcare of Arizona, agrees that affordability is a systemwide issue.
“UnitedHealthcare is committed to helping employers make healthcare more affordable while helping their employees and families,” and that is the aim, she says.
“That means reducing waste, streamlining processes with responsible AI, and more coordinated care for people with complex health needs.”
Specialty pharmacy remains the most unpredictable line item in employer budgets. GLP-1 drugs (glucagon-like peptide-1, which are used for diabetes control and weight loss), oncology therapy, autoimmune treatments, biosimilars, and the new gene-therapy pipeline are the major contributors, Byrnes explains.
These drugs are “life-changing but extremely costly,” he says, and require intensive clinical and utilization management.
Mike Cody, Marsh McLennan Agency’s senior vice president, agrees.
“Cancer is the headline story,” Cody says.
“We are starting to see more diagnoses, more cancers caught earlier, and more employees living longer because of treatment. So that means costs are going up in volume and intensity. This isn’t inflation or delayed care that doesn’t get worked through the system, as it did in the last two renewal cycles. It’s a structural change because of high-cost, specialized therapy.”
Chuchro says treatments may change a person’s life, which is important, but they also cause price volatility for employers.
UnitedHealthcare data show that specialty medications account for about 55% of pharmacy costs, Kane says.
Greenberg adds employers should prepare for continued growth in specialty medications and gene therapies, particularly treatments for cancer, autoimmune disorders and rare diseases.
“These therapies can be transformative, with some offering one-time, potentially curative treatment,” he says. “But the upfront costs are substantial.”
As a result, many self-funded employers are relying more heavily on reinsurance, shared-risk arrangements and outcomes-based contracting to manage financial volatility associated with high-cost claims.
Managing rising costs
Studies show that those expenses increased 225% per member in the 12 months after starting a GLP-1, and medical costs increased 11%.
However, more than half of the members stop taking the injectable medication within 12 months.
“Some people use these medications, and they do provide important health benefits, but they also have other health concerns, follow-up care needs and general spending that may come with them,” Kane says.
About 73% of employees say GLP‑1 coverage impacts retention, Kane says.
Employers are experimenting with prior authorization, adherence programs and lifestyle‑modification requirements to balance affordability with outcomes.
Some businesses are also considering curtailing or delaying coverage for certain applications, a decision Kane says must be viewed critically.
Chuchro says “integration” is the answer.
“At Cigna Healthcare, we believe the answer is a more integrated approach — one that is clinical rigor, specialty expertise, site-of-care management, biosimilar strategies, and personalized support so customers get treatment that’s appropriate and employers get more predictability and control.”
Diabetes, cardiovascular disease, digestive disorders and behavioral health conditions increase employer healthcare costs. Early diagnosis is a lower cost per member. And many chronic conditions go unmanaged until they turn into more serious and costly health problems, Kane says.
“Early intervention is crucial to minimize catastrophic or high‑cost claims from crashing into financial projections,” she adds.
UnitedHealthcare’s Special Needs Initiative and Complex Care Concierge programs provide access to care-oriented care professionals so that individuals with complex conditions have care advocates who enable them to manage complex situations and avoid catastrophic claims.
High‑cost claims are also rising at a rapid pace. According to UnitedHealthcare’s 2026 Health Trends Report, claims for $100,000 or more increased 12.9% year-over-year and half of catastrophic claimants had no previous indicators. Younger workers are now 10% of high‑cost claimants.
Beyond rising premiums
Chuchro says employers are feeling the impact.
“We are seeing much more concentrated risk from a small number of very expensive claims,” he says.
“That is why affordability has to be approached more holistically.”
Mental health services are a big deal for employers who value productivity and workforce retention.
“Instead of being seen as an independent issue, it is now part of the whole care journey — not just an EAP, virtual visit or additional benefit on the side,” Byrnes says.
Arizona employers have another challenge to contend with: a shortage of in-person providers, particularly in fast-growing areas like the East Valley.
Kane says behavioral health relates to chronic conditions and high-cost claims are a result.
“It’s very important to ensure whole‑person care is supported,” she says.
Greenberg says access remains the industry’s biggest challenge.
“The most persistent gaps are still access-related,” he says, citing shortages of psychiatrists, psychologists, clinical social workers and specialists who treat trauma, adolescent behavioral health and substance-use disorders.
To address those gaps, employers are expanding employee assistance programs, investing in virtual care and supplementing provider networks. AZ Blue says it has added nearly 4,000 behavioral-health providers in recent years.
More employers are designing benefits around life stages — fertility, maternity, postpartum care, pediatric care, menopause and care for aging parents.
Byrnes says they are no longer considered niche offerings.
“They are at the forefront of the conversation about workforce retention, productivity and overall employee well‑being,” she says.
Chuchro says employers are broadening the definition of family support.
“We are seeing growing interest in fertility support, pregnancy and postpartum programs, adoption and surrogacy assistance, menopause support and benefits that help employees care for children, aging parents or loved ones with complex needs,” he says.
Kane notes that doula support is increasingly popular. By Jan. 1, 2027, 7.2 million UnitedHealthcare members may have access to doula services if their employer opts in.
Studies have shown that doula support reduces preterm births and C‑sections, increases breastfeeding rates, and decreases postpartum anxiety and depression by 57%.
“Those outcomes really matter, first and foremost, for employees, babies and families,” Kane says.
“But they also support employers’ broader workforce goals.”
The experts describe ways to help people take the right care at the right time.
Byrnes says the most significant 2027 plans will “combine affordability with a better member experience,” bringing together virtual‑first models, tiered networks and reference‑based pricing.
Kane references Surest, UnitedHealthcare’s no‑deductible, upfront‑priced plan, as a model for future commercial benefits. Members who can compare options before getting care save on average $2,631 per visit for certain surgeries and 19% on complex imaging.
Benefits strategy matters
The Surest app is designed so that members can save nearly 40% and employers can save 8% to 15% per year on premiums, with the fastest adoption among large Arizona employers.
“Consumers are looking for a more seamless, personalized and understandable experience,” Kane says.
“Surest gives members information upfront so they can make more informed choices.”
As such, employers are looking more seriously at pharmacy strategy, carve‑outs, transparency models and alternative funding.
“Pharmacy is now too big a part of total healthcare spend to manage passively,” Chuchro says.
“We are seeing more transparent models, a closer look at rebates, and a greater emphasis on clinical value.”
Kane says employers are also looking into out‑of‑network management and focused networks to reduce unnecessary spending. A recent Milliman report found that UnitedHealthcare lowers the total cost of care by more than 11% and employers save even more with its Naviguard program.
Employers are more data‑driven, but the goal is not more dashboards, Byrnes says, but early intervention.
“The real value is not having more reports — it is in turning data into action.” Chuchro agrees.
“Data and predictive analytics are becoming much more important because employers want to be proactive rather than reactive,” he says. “The opportunity is not just to generate more reporting, but to create better decisions and better experiences.”
Kane says UnitedHealthcare is investing heavily in AI and digital tools to personalize care. UnitedHealth Group has more than 1,000 AI use cases, including its new AI chatbot, Avery, which helps members with coverage questions, cost estimates, provider search and claims status.
UnitedHealthcare was recently able to help one large employer with a population of more than 77,000 members better understand that 42% of its employees had complex conditions, including cancer. Based on that analysis, the employer deployed a cancer-specific care management team to better support those members, helping employees save more than $267,000 by closing 105 gaps in care.
Preparing for tomorrow
Transparency, parity in mental health services and prescription drug reporting as well as fiduciary oversight are important for 2027.
“The environment is getting more complex,” Cody says.
Employers must “demonstrate compliance in a very practical and documented way, not just assume their vendors have it all covered.”
Chuchro says employers need to prepare now for a more demanding compliance environment.
“The challenge is not just to understand the rules but to manage the operational complexity that comes with multiple partners and multiple data streams and limited internal capacity,” he says.
Arizona employers will also be guided by state‑specific expectations, particularly regarding mental health parity and benefit mandates, he says.
Byrnes says employers should be prepared for continued scrutiny on transparency, reporting, appeals and member communication. The 2027 benefits landscape is littered with complexity — clinical, financial and regulatory.
But the reality is: employers are moving toward integrated, navigable, data-driven benefits that promote cost control and employee well‑being.
As Byrnes puts it, the best strategies will be those that “reduce waste, improve navigation, and build confidence for employees at the moment they need care.”
