The
Business
Group
on
Health,
an
employer
advocacy
organization,
projects
that
healthcare
costs
will
rise
by
7.8%
in
2025,
the
highest
rate
of
increase
in
more
than
a
decade.
Consulting
firm
Mercer
expects
total
health
benefit
costs
per
employee
to
rise
5.8%
in
2025,
even
after
planned
measures
to
reduce
costs.
Consulting
firm
WTW,
meanwhile,
projects
that
global
medical
costs
will
grow
by
10.4%
in
2025.
Whatever
the
number,
one
thing
is
clear:
Rising
healthcare
costs
is
a
significant
challenge
that
employers
must
contend
with.
Faced
with
these
cost
pressures,
employers
are
trying
to
hold
their
vendor
partners
accountable
and
are
evaluating
their
health
plan
and
pharmacy
benefit
manager
partners,
experts
say.
They’re
looking
to
conduct
more
requests
for
proposals,
invest
in
well-being
and
gain
access
to
medical
claims
data
from
their
health
plans.
They
are
trying
out
these
strategies
as
employers
increasingly
feel
sidelined
by
their
insurance
carriers
and
PBMs
who
they
believe
aren’t
always
looking
out
for
their
needs.
“There
are
a
lot
of
things
out
there
that
[are
making]
employers
say,
‘Something
has
gotta
give,’”
said
Cheryl
Larson,
president
and
CEO
of
the
Midwest
Business
Group
on
Health,
in
an
interview.
While
they
can
take
some
actions,
ultimately,
employers
can’t
fix
healthcare
prices
by
themselves.
Policy
changes
at
the
state
and
federal
levels
are
needed.
What’s
contributing
to
rising
costs?
Several
things
are
contributing
to
increasing
healthcare
costs,
but
one
of
the
biggest
factors
is
pharmacy
costs.
According
to
the
Business
Group
on
Health,
pharmacy
costs
accounted
for
more
than
a
quarter
of
healthcare
costs
in
2023.
Rising
drug
costs
are
largely
driven
by
expensive
specialty
medications,
cell
and
gene
therapies
and
GLP-1s,
said
Ellen
Kelsay,
president
and
CEO
of
the
organization.
A
survey
by
the
National
Alliance
of
Healthcare
Purchaser
Coalitions,
an
advocacy
organization
for
employers
and
purchasers,
backs
this
up.
About
99%
of
respondents
listed
drug
prices
as
a
significant
threat
to
affordability.
Following
drug
prices,
84%
of
respondents
listed
high-cost
claims
and
79%
listed
hospital
prices.
A
high-cost
claim
is
generally
a
claim
from
an
individual
that
is
at
least
$250,000
and
can
result
from
several
different
conditions
like
cancer
or
neo-natal
care.
According
to
the
Business
Group
on
Health,
there
is
an
increase
of
costly
conditions
like
cancer,
cardiovascular
disease
and
musculoskeletal
conditions
that
employers
are
having
to
cover.
“The
underlying
problem
is
distorted
and
broken
markets,”
said
Shawn
Gremminger,
president
and
CEO
of
the
National
Alliance
of
Healthcare
Purchaser
Coalitions.
“For
hospitals
and
insurers
it’s
largely
due
to
consolidation
and
anti-competitive
practices,
for
PBMs
it’s
vertical
integration
and
opaque
practices,
and
for
drug
manufacturers
it’s
patent
gaming.
Until
fixed,
these
problems
will
remain
and
the
cycle
of
higher
prices
each
year
will
continue.”
Not
only
are
there
more
high-cost
claimants,
there
are
also
more
people
using
their
health
benefits
now,
according
to
Regina
Ihrke,
senior
director
and
health,
equity
&
wellbeing
leader
for
North
America
at
WTW.
“Usually
we
see
20
to
30%
of
any
employer
population
that
doesn’t
use
the
plan
at
all.
We
have
fewer
people
not
using
the
plan
over
this
last
year
than
we’ve
seen,”
Ihrke
said
in
an
interview.
While
all
employers
are
facing
increasing
healthcare
costs,
small
employers
and
their
employees
are
struggling
more
acutely.
A
report
recently
released
by
the
Commonwealth
Fund
found
that
in
2023,
small
business
employees
paid
an
average
of
$7,529
per
year
for
family
premiums,
which
is
$733
more
than
employees
at
large
firms,
and
also
faced
deductibles
that
were
over
$1,500
higher.
This
trend
is
likely
to
continue.
“If
anything,
small
firms
have
less
leverage
than
large
firms
do.
They
are
somewhat
more
at
the
mercy
of
the
market,
given
their
smaller
size,”
said
Sara
Collins,
senior
scholar
and
vice
president
for
health
care
coverage
and
access
and
tracking
health
system
performance
at
the
Commonwealth
Fund.
She
noted
that
because
small
businesses
have
fewer
employees
covered
in
their
plan,
they
don’t
have
the
bargaining
power
that
larger
companies
have
with
their
rate
negotiations
with
insurers.
What
can
employers
do
to
manage
costs
in
2025?
In
order
to
manage
these
rising
healthcare
costs,
employers
are
increasingly
starting
to
hold
their
vendor
partners
accountable
for
high
quality
care
and
are
asking
for
evidence
of
improved
outcomes,
experience
and
lower
costs.
“Employers
will
conduct
increased
[request
for
proposal]
activities
in
the
year/s
ahead
as
they
assess
partnerships,
leveraging
current
partners
for
enhanced
pricing,
reporting
and
accountability,”
Kelsay
stated.
“They
also
will
closely
review
new
health
plans
and
PBM
partners,
which
are
more
agile
and
which
may
offer
alternative
network
models
and
greater
price
and
quality
transparency.
Employers
will
also
invest
in
well-being,
with
a
focus
on
prevention
and
immunizations,
primary
care,
chronic
disease
management
and
on
achieving
provider
quality.”
The
National
Alliance
of
Healthcare
Purchaser
Coalitions
survey
also
showed
that
employers
aren’t
happy
with
their
PBMs:
52%
are
considering
changing
their
PBM
in
the
next
one
to
three
years.
According
to
Gremminger,
PBMs
use
“opaque
business
practices”
that
allow
them
to
change
the
status
of
a
drug
from
generic
to
specialty
to
name
brand
without
the
employer’s
consent.
The
big
three
PBMs
—
CVS
Caremark,
Express
Scripts
and
Optum
Rx
—
also
all
own
their
own
specialty,
retail
and
mail
order
pharmacies
and
“strategically
price
drugs
to
maximize
revenue
to
their
internal
pharmacy
chains,”
he
declared.
Larson
of
Midwest
Business
Group
on
Health
also
noted
that
employers
shouldn’t
be
solely
relying
on
their
brokers
and
consultants
for
guidance.
Employers
aren’t
healthcare
experts,
so
very
often
they
lean
on
brokers
and
consultants.
But
sometimes
PBMs
and
third
party
administrators
give
consultants
and
brokers
financial
incentives
to
direct
employers
to
themselves,
experts
previously
told
MedCity
News.
Aside
from
reviewing
their
PBM
relationships
and
demanding
changes,
employers
are
also
looking
to
understand
their
healthcare
costs
better.
Many
employers
believe
that
getting
access
to
their
medical
claims
data
can
ensure
they’re
fulfilling
their
fiduciary
responsibilities
of
getting
the
best
health
benefits
for
the
best
cost.
Some
have
taken
to
suing
their
insurance
carriers,
alleging
that
they
aren’t
providing
full
access
to
their
data,
according
to
Larson.
This
includes
the
Kraft
Heinz/Aetna
case
which
went
into
arbitration.
W.W.
Grainger
also
sued
Aetna
in
May
for
not
giving
access
to
data.
Gremminger
echoed
this,
noting
that
employers
“need
to
focus
on
their
fiduciary
responsibility
and
play
hardball
in
negotiating
with
plans
and
hospitals,
establish
narrower
networks
focused
on
cost
and
value,
and
eliminate
conflicts
of
interest
in
contracts.”
According
to
Ihrke
of
WTW,
employers’
strategies
depend
on
how
much
risk
they
want
to
retain.
Some
employers
may
be
considering
Individual
Coverage
Health
Reimbursement
Arrangements,
in
which
they
give
employees
a
monthly
allowance
of
tax-free
money
to
buy
healthcare
services
for
their
own
specific
needs.
Others
may
be
looking
at
plan
design
and
cost
sharing.
“We
haven’t
really
looked
at
plan
design
and
cost
sharing
since
like
2011
after
Obamacare
was
passed.
It’s
time
to
really
look
at
those
and
say,
‘Does
my
strategy
before
still
make
sense?
Am
I
solving
for
the
affordability
of
a
health
plan
for
my
low
wage
workers?
Are
they
in
the
right
plans?
Are
they
over-insured
or
under-insured?’”
she
said.
Ultimately,
however,
addressing
costs
“requires
public
policy
fixes
at
both
the
state
and
federal
levels
to
drive
market
competition,
transparency,
fair
pricing
and
affordability,”
Gremminger
argued.
This
includes
banning
anti-competitive
contract
provisions
between
hospitals
and
health
plans,
requiring
health
plans
to
provide
full
disclosure
of
claims
data
to
employers
“without
restrictions
or
additional
costs,”
and
more
price
transparency
for
PBMs.
However,
only
time
will
tell
if
these
strategies
and
policy
fixes
will
be
enough
to
curb
future
medical
costs.
Photo:
santima.studio,
Getty
Images
Chris
Kathryn
