Healthcare costs up

The projected health care cost trend jumped to almost 8 percent for 2025, the highest rise in more than a decade, according to recent research from Business Group on Health. The 2025 Employer Health Care Strategy Survey noted that the predicted surge in employer health care spending–actual health care costs have grown a cumulative 50 percent since 2017–comes against a backdrop of inflation, heightened demand for expensive drugs such as GLP-1s, potentially curative but high-cost cell and gene therapies, and the ongoing burden of treating cancer and other chronic conditions. Employers reported that they were preparing to continue to absorb much of the increases, at least for the upcoming year, while more rigorously leaning into additional cost management strategies. [WCI offers cost-saving strategies for small and large employers.]

“Employers are steadfast in their desire to provide comprehensive offerings to their workforces,” said Ellen Kelsay, president and CEO of Business Group on Health. “They continue to absorb much of the upticks in cost and remain keenly focused on lowering spending and improving outcomes and experiences for employees. However, the foreboding cost landscape has accelerated the need for bold transformation, and employers seek partners who will make that happen.”

The survey found the following:

• Pharmacy costs. The median percentage of health care dollars spent on pharmacy rose from 21 percent in 2021 to 27 percent in 2023. Seventy-six percent of employers reported being “very concerned” with overall pharmacy cost.
• GLP-1 medications. Some 79 percent of employers said they saw a heightened interest in obesity medications, including GLP-1s, among their covered members. While these medications are a standard treatment for diabetes (covered by 96 percent of employers in 2024), eligibility has broadened to include obesity (covered by 67 percent of employers in 2024) and cardiac conditions (covered by 34 percent of employers in 2024). The survey noted that 96 percent of employers expressed concern about the long-term cost implications of GLP-1s.
• Quality and performance. Respondents said they would leverage the request for proposal (RFP) process to secure better vendor pricing and end partnerships with underperformers, while having an eye on non-traditional health plans and transparent pharmacy benefit manager (PBM) arrangements as additional levers to lower costs. Employers also indicated that they would integrate benefit offerings to streamline and simplify member experience.
• Mental health. Nearly 80 percent of survey respondents reported that improving access is a top mental health priority for 2025. To address both access and cost, employers said they were continuing to pursue strategies such as no- or low-cost virtual counseling, eliminating out-of-network barriers, and the use of on-site counselors.
• Health equity. To narrow health disparities within their plans and programs, employers reported continuing to pursue targeted approaches that include working with employee resource groups (ERGs) to better promote benefits and well-being initiatives. Employers also are focused on issue areas that include affordability for lower-income employees; women’s and reproductive health; and support for the health needs of LGBTQ+ employees, as well as employees with a disability or who are neurodiverse.
• National priorities. Employers continue to value the preemption provisions under ERISA, because it allows for the offering of comprehensive benefits to employees in a nationally consistent manner. Survey respondents also identified the following as national health care priorities: addressing mental health and health care workforce shortages and broadening the availability of generic medications.

SOURCE: www.businessgrouphealth.org

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