Rising medical costs may affect workers: Employer survey

Diving overview:

Nearly three-quarters of employers say higher health care costs will likely lead to trade-offs with salaries and raises, requiring them to pass more costs on to employees, according to a new survey from the National Alliance of Healthcare Purchaser Coalitions. I think there is. According to the survey, the biggest threat to health care affordability is drug prices, with 99% of employers agreeing it is a significant threat, followed by high billing and hospital prices. This is the latest survey to reveal that employers are bracing for rising healthcare costs, including reconsidering arrangements with pharmacy benefit managers that could inflate spending.

Dive Insight:

Employers expect spending on health benefits to skyrocket in 2025, with specific growth rate projections ranging from about 8% to 9%. Companies are scrambling to implement strategies to alleviate the situation, according to a survey of about 190 U.S. employers this fall by NAHPC, a nonprofit representing employer groups.

One survey respondent said, “It's no longer just about cost control, it's about survival.'' Another stakeholder viewed rising costs as an “existential threat.”

Other studies show that much of the cost increase is due to pharmaceuticals, including increased demand for GLP-1 (glucagon-like peptide-1 receptor agonists). Traditionally used to treat diabetes, these drugs have been shown to be effective in combating a variety of conditions, but are in particular demand for weight loss.

The list price for GLP-1 is so high that employers are wondering whether they should cover the drug. Approximately 46% of employers said they had GLP-1 coverage for obesity, and an additional 21% said they were considering coverage for the next three years. NAHPC found.

Many employers offering or considering short-term GLP-1 coverage are considering measures to reduce coverage costs, such as restricting access to certain people with chronic conditions or a BMI greater than 30 . Employers are also considering it. The strategy, which links coverage to lifestyle changes and covers counterfeit drug combinations, has faced pushback from drug companies.

Employers are also considering overhauling pharmacy benefits to keep costs down, according to . N.A.H.P.C.

72 percent Employers surveyed that contract with one of the “big three” pharmacy benefit managers: Caremark, Express Scripts, and OptumRx. Pharmaceutical intermediaries owned by CVS, Cigna, and UnitedHealth have come under fire for hidden fees, self-dealing, and complex black-box contracts, leaving health insurers and employers unsure of where their money is going. It is claimed that there is no such thing.

Research shows that more than half of employers are considering changing PBMs within the next one to three years. Buyers said they want more transparent contracts and pricing, and fewer conflicts of interest.

Large PBMs are often reimbursed to incentivize higher-priced drugs to be prioritized in a list of covered drugs, known as a formulary, which can lead to increased drug spending. Most employers surveyed said they are looking to gain greater control over formulations and increasing the addition of biosimilars to reduce costs.

PBMs are at the center of public scrutiny of drug costs, including from Congress and the Federal Trade Commission. In September, the FTC sued Caremark, Express Scripts, and Optum Rx over business practices that antitrust regulators say contributed to rising insulin prices.

According to the survey, more than half of employers are taking steps to address high billing costs, including obtaining prior authorization, purchasing medicines through non-traditional channels, and contracting directly with providers.

Fewer employers are redirecting care to less expensive facilities such as the home, promoting precision cancer medicine, or reducing the risk of neonatal ICU claims through more generous fertility benefits. However, NAHPC says there is interest in such a strategy.