Rising medical costs, reduced reimbursement rates and shifting regulations are squeezing health insurers’ margins and challenging their ability to achieve long-term strategic and financial goals.
As they prepare for another year of volatility, insurers are reassessing their long-term incentive (LTI) programs to retain and motivate the talent critical to navigating heightened uncertainty and cost pressures.
How we got here
In 2025, health insurers faced numerous challenges affecting the viability of their strategic plans:
- Lower Medicare reimbursement rates
- Higher medical services utilization, resulting in higher claims
- Widespread use of expensive drugs, particularly GLP-1s
- Heightened industry competition
- Growing price sensitivity among consumers
These pressures made it harder to set reliable long-term performance goals and maintain competitive compensation programs. Without thoughtful design, organizations risk misaligned incentives, reduced engagement and difficulty retaining top talent — at a time when strong leadership is essential to weathering the ongoing uncertainty.
To address these challenges, health insurers should focus on practical steps that make LTI programs more adaptable and aligned with organizational priorities. Based on market observations, the following strategies have helped some organizations manage volatility while maintaining competitive and motivating compensation structures.
