It’s a story as outdated as time: Healthcare prices are rising quicker than inflation, and employers are struggling to handle them as they eat up a bigger and bigger share of their budgets.
Healthcare prices are anticipated to rise by almost 8% in 2025, in line with a report by the Enterprise Group on Well being, contributing to a greater than 50% enhance since 2017.
“We are actually experiencing the best year-over-year enhance in additional than a decade,” Jim Winkler, chief technique officer on the Enterprise Group on Well being, mentioned in an electronic mail. “Employers have absorbed the vast majority of price will increase over the previous 4 years, they usually doubtless can not proceed to take action.”
Pharmacy bills are primarily answerable for current will increase in healthcare prices. From 2021 to 2023, the median share of healthcare spending on pharmacy rose from 21% to 27%, in line with the Enterprise Group on Well being. Because of this, 3 in 4 employers say they’re “very involved” about whole pharmacy prices, the report says.
As well as, extra persons are utilizing GLP-1 weight reduction medicine, together with Ozempic, Wegovy, Zepbound and Mounjaro, to deal with diabetes, weight problems and different situations.
Nevertheless, whereas the medicine are clinically efficient, they’re costly at a price ticket of about $700 to $800 per 30 days. Greater than 2 in 5 adults underneath age 65 with personal insurance coverage — about 57.4 million individuals — could also be eligible for GLP-1s, which might speed up healthcare spending.
“GLP-1s are a significant contributor to pharmacy price total, particularly as utilization extends to medical situations past diabetes and weight administration,” Winkler mentioned.
Increased charges of power situations, together with most cancers, cardiovascular situations, diabetes and psychological well being situations, additionally contribute considerably to rising healthcare bills for employers. Whereas a lot of these prices are attributable to an getting older workforce, preliminary most cancers diagnoses have grown extra extreme amongst younger individuals who deferred or delayed care in the course of the COVID-19 pandemic, Winkler mentioned.
Consolidation and diminished competitors amongst healthcare suppliers additionally contribute to rising prices, particularly for inpatient care.
Beneath are six key methods employers can use to handle healthcare prices in 2025.
1. Maintain distributors accountable for scientific outcomes and monetary outcomes.
Greater than 8 in 10 employers are implementing or strongly contemplating utilizing the request for proposal course of to safe higher pricing from distributors, in line with the Enterprise Group on Well being.
Employers ought to rigorously assess the ROI related to distributors’ options, use shared efficiency metrics that align with the group’s scientific and monetary objectives, and exchange underperforming companions as wanted, Winkler mentioned.
Nevertheless, demonstrating the ROI for “wellness or different cost-containment measures will be difficult,” mentioned Jennifer Chang, HR data advisor on the Society for Human Useful resource Administration.
2. Lean into packages that align with value-based care fashions, together with in-network suppliers that encourage cost-effective, high-quality outcomes.
Utilizing facilities of excellence — choose suppliers that ship specialised medical care that meet particular price and high quality benchmarks — can assist decrease prices for behavioral well being and different companies, Chang and Winkler mentioned.
Excessive-performance community fashions that encourage less expensive care by higher provider-payer collaboration and value-based cost, in addition to superior major care packages that tie reimbursement to managing particular power situations, akin to diabetes, also can assist employers decrease healthcare spending, Chang and Winkler mentioned.
3. Undertake new methods to handle pharmacy prices.
Different pharmacy profit administration packages which can be extra clear, much less reliant on rebates and encourage the usage of biosimilars can assist employers rein in rising pharmacy prices, Winkler mentioned.
“Pharmacy is definitely a number of packages that must be totally built-in from a consumer expertise and data-sharing perspective,” Winkler mentioned.
Employers don’t want to make use of the identical vendor for all their pharmacy wants, which supplies further alternatives to avoid wasting prices. Employers must also pair GLP-1 entry with dietary counseling, diabetes administration and different situation administration approaches to maximise the advantages of those new weight administration medicine.
4. Assist staff navigate the healthcare supply system.
Care navigators, worker trainings and different assets can assist be certain that staff entry and use the best high quality, most cost-effective care, consultants mentioned. Explaining cost-sharing mechanisms, akin to copays and deductibles, to staff will enable them to “use their healthcare advantages correctly,” Chang mentioned.
5. Construct worksite well being facilities.
A rising variety of organizations are investing in employer-sponsored major care clinics that provide staff no- or low-cost companies at or close to workplaces as a result of “they’ve been working right into a brick wall” making an attempt to cut back prices by the normal healthcare supply system, mentioned Megan Colleen McHugh, a well being companies researcher and professor at Northwestern College’s Feinberg College of Medication.
WHCs can enhance staff’ use of preventive medical companies, enhance power care administration and improve high quality of life, in line with a new research co-authored by McHugh. The paper, which evaluated the findings of 10 earlier research, discovered that WHCs delivered annual price financial savings starting from roughly $35,000 to $2.1 million and ROI from $1.09 to $15.88 per $1 of funding.
Nevertheless, WHCs “solely work should you’re a big employer” as a result of they’ve excessive fastened prices, and there may be little or no proof concerning the high quality of care they ship, McHugh mentioned.
6. Leverage knowledge analytics to find out which price administration methods take advantage of sense.
Employers should assess vendor efficiency, scientific situations, community utilization and geographic entry limitations to find out the most effective method to decreasing healthcare prices, consultants mentioned.
Analyzing claims knowledge, for instance, can assist employers determine what’s driving their healthcare spending and “goal interventions for high-cost areas,” Chang mentioned.
Pitfalls employers ought to keep away from
Nevertheless, of their quest to decrease healthcare prices, employers should keep away from methods that might result in worker dissatisfaction, diminished engagement or unintended penalties, Chang mentioned. Employers want to contemplate their organizational tradition, together with its “tolerance for disruptive change,” Winkler mentioned.
Extreme worker cost-sharing, for example, can hurt worker morale and retention, whereas abruptly chopping advantages with out wonderful communication and help can “result in backlash,” as staff could understand elevated cost-sharing measures as a discount in whole compensation, Chang mentioned.
Value-containment measures also can create fairness points in the event that they disproportionately have an effect on lower-income staff, she mentioned, including that one-size-fits-all well being plans that don’t think about workforce demographics or wants can result in decrease adoption and worker dissatisfaction.
As well as, adopting new plans or wellness initiatives can “pressure HR assets and require important coordination,” Chang mentioned.
Employers can handle these challenges successfully by partaking staff early, offering clear and constant communication and rolling out modifications regularly, Chang mentioned. They need to additionally monitor and regulate cost-containment measures primarily based on worker suggestions and utilization knowledge, in addition to guarantee cost-sharing modifications and wellness packages are inclusive and equitable, she mentioned.
Moreover, making a office that helps staff’ bodily, psychological and emotional well-being by wholesome cafeteria choices, on-site health services and different measures can assist “foster a tradition of well being,” Chang mentioned, serving to to decrease healthcare prices upstream of the pharmacy and healthcare supply system.
