The main reason your company’s healthcare costs are skyrocketing
Organizational leaders are witnessing a steep and unprecedented rise in employee healthcare costs that is eroding bottom-line profitability. According to data from the Business Group on Health, these costs are projected to rise by 9% this year, representing a 62% increase since 2017. To put it in perspective, this represents an incremental hit of nearly $1 million to the bottom line for a midsize organization of 500 people.
What CFOs are now confronting is a tipping point where the average total cost to insure an employee is nearing $20,000 annually. Notably, it is specifically mental health claims that are driving the spike. PwC’s 2026 Medical Trend report shows that inpatient mental health claims have jumped a staggering 80% in the last 24 months.
For years, the corporate world has treated employee mental health as an imported problem—personal struggles that people bring with them into the workplace. But the evidence is now irrefutable that how employers manage their employees is having the greater impact and is often the leading driver of the strain. To be very clear, the way we work today has become a primary manufacturer of incremental stress, burnout, and mental health decline.
The Smoking Gun: Work is the Cause
Until now, the standard corporate response to employee mental health challenges has been to treat the symptoms rather than address the root causes. This means they’ve offered workers resilience training, yoga and exercise classes, and sleep and meditation apps—all band-aids on a structural wound.
The evidence shows that mental health strain is no longer an outlier and is the predictable outcome of employee expectations that exceed the human ability to recover and sustain high levels of productivity. According to the Mental Health America (MHA) data, 84% of workers identified at least one workplace factor—not a personal one—that was actively harming their mental health.
This suggests that for the vast majority of people, the mental health crisis isn’t bred at home; it’s being created at their desk. Here are three workplace leadership factors causing the most damage:
- A Deliberate Lack Of Boundaries:
With technology allowing people the ability to remain connected to work at all hours, the clear line between when employees’ workdays start and end has been entirely erased. Not wanting to forfeit productivity, organizations have so far resisted giving people this clarity—and workplace managers too often exploit this by texting and e-mailing employees at odd hours and on weekends. Always being on and expected to respond prevents the human nervous system from ever truly recovering. People never get off the treadmill. - The Erosion of Human Connection:
A focus on efficiency—and doing more with less—increasingly means workplace leaders are stretched too thin to hold weekly check-in meetings with their teams. Companies are systematically replacing human-to-human coaching with AI systems, providing performance feedback via online dashboards and algorithmic scores. This is a biological disaster; it deprives the human nervous system of the context and connection required to feel safe. It also greatly undermines feelings of belonging, which is known to be the cornerstone of human well-being. - The Micromanagement Surge:
The rise of digital oversight is slowly creating a pervasive “surveillance culture” in our workplaces. In the 2024 American Psychological Association’s, “Work in America” survey, 43% of employees reported feeling “monitored” at work in some way, and those who felt monitored were significantly more likely to report poor mental health. The lack of trust makes people feel incapable of doing the job they were hired to do and whittles away at their self-esteem. Furthermore, this lack of agency strips away their sense of control, which is another primary driver of human well-being.
The Managerial Squeeze
The primary source of employee stress isn’t just their draining workloads, it is the person assigning them. The MHA report found that nearly 40% of employees explicitly name their manager as the top cause of their mental health issues.
This is further validated by Gallup’s 2025 State of the Global Workplace Report, which found that managers report higher levels of daily stress and burnout than the people they lead—a “stress contagion” that inevitably flows downward to their teams.
It’s clear that when managers are run thin by layoffs and executive pressure, they often default to transactional and impersonal styles that make people feel devalued and tipped into survival mode. And, whenever human beings feel unsafe—that their job is constantly on the line—they’re naturally more likely to break.
In the big picture, research shows many workers feel that their bosses are simply not there for them; they don’t feel known and respected for who they are outside of work or valued for all they contribute. All of this means that workplace leaders have become stressors rather than stress relievers.
The Remedies: A Redirection Of Time And Intention
Facing both a financial and moral imperative to neutralize these stressors, organizations must now find the courage to sustainably pivot—moving away from what’s effectively been “wellness theater” and toward structural changes explicitly known to elevate employee well-being—and help restore mental health:
Re-establish The On/Off Switch
Even if companies choose against establishing a one-size-fits-all remedy, workplace leaders should set explicit “dark hours” (e.g., 7 p.m. to 7 a.m.) for their own teams so people can rejuvenate. This will demand that leaders model and respect those boundaries and remove any stigma currently attached to not responding to messages after work. Nothing says people can’t work beyond normal hours if they choose to. It’s the expectation of always needing to be on that is the real pain point.
Foster Radical Belonging
Human beings aren’t built to handle pressure alone, and feeling connected to one’s team is what supports resilience and personal thriving. Intentionally creating opportunities for employees to connect socially has become essential today. Leaders must also restore weekly check-ins (and coaching) with all direct reports and allow sufficient time to discuss each person’s well-being before focusing on work goals and performance.
Look Out For People
What people need to flourish are feelings of psychological and emotional safety. So, leaders should ask themselves, “Do my employees have work demands they can reasonably meet?” “Am I available enough to them as a resource and sounding board?” “Do my actions demonstrate that I care about each person on and support them individually? Do people feel they have a voice in how their work gets done and in many of the decisions I make?”
The Heart of the Matter
If we’re learning anything today, it’s that organizations cannot successfully scale productivity by subtracting humanity. The dramatic rise in healthcare costs and mental health claims reveals the illusion of this, and companies themselves are paying just as great a price as workers.
In the end, the most effective mental health support a company can offer is a manager who treats their people humanely.