Rising health care costs could trickle down to workers

Almost three-fourths of employers believe that increasing healthcare costs lead to trade-offs with salary or wage increases and could necessitate more cost-shifting to employees, according to new survey from the National Alliance of Healthcare Purchaser Coalitions. 

The biggest perceived threat to healthcare affordability is drug prices, with 99% of employers agreeing it’s a significant threat, followed by high-cost claims and hospital prices, the survey found. 

It’s the latest survey finding employers are gearing up for rising healthcare costs, including by reconsidering arrangements with pharmacy benefit managers that could be inflating spending. 

Employers expect spending on health care benefits to soar in 2025, with specific growth estimates ranging from around 8% to 9%. Companies are hustling to adopt strategies to mitigate the situation, according to NAHPC, a nonprofit that represents employer groups, which surveyed almost 190 U.S. employers this fall. 

“It’s not just about cost control anymore; it’s about survival,” one respondent to the survey said. Another deemed rising costs “an existential threat.” 

Much of the cost growth is being driven by pharmaceuticals, including rising demand for GLP-1s, or glucagon-like peptide-1 receptor agonists, according to other research. The medications, which were traditionally used to treat diabetes, have shown efficacy in combating a variety of conditions but are especially in-demand for weight loss. 

Due to GLP-1s’ sky-high list prices, employers have grappled with whether they should cover the drugs. About 46% of employers said they cover GLP-1s for obesity, while another 21% said they are considering coverage in the next three years, NAHPC found. 

Of the employers offering or considering near-term GLP-1 coverage, many are considering steps to mitigate the cost of coverage, like limiting access to specific populations, like those with chronic conditions or a body-mass index over 30. Employers are also considering tying coverage to lifestyle changes or covering compounded copycat versions of the drug, a strategy that’s faced backlash from drug companies. 

Employers are also looking to reshape their pharmacy benefits to curb costs, according to NAHPC. 

Seventy-two percent of employers surveyed contract with one of the “Big Three” pharmacy benefit managers: Caremark, Express Scripts or OptumRx. The drug middlemen, which are owned by CVS, Cigna and UnitedHealth respectively, have faced criticism for hidden fees, self-dealing and complex black box contracts that health insurers and employers say leave them in the dark about where their money is going. 

More than half of employers are considering changing their PBM in the next one to three years, according to the survey. Purchasers said they’re looking for more transparent contracts and pricing and to reduce conflicts of interest. 

Major PBMs are often reimbursed in a way that incentivizes them to prioritize high-cost drugs in lists of covered drugs called formularies, which can be a contributor to higher drug spend. Along with aiming for more control over their formularies, most employers surveyed said they were including more biosimilars to unlock savings. 

PBMs have found themselves at the center of public scrutiny over drug costs, including from Congress and the Federal Trade Commission. The FTC sued Caremark, Express Scripts and Optum Rx in September over business practices that antitrust regulators allege have contributed to the rising cost of insulin. 

To address expensive claims, more than half of employers are taking steps like carving out prior authorization, purchasing drugs through nontraditional channels and direct contracting with providers, the survey found. 

Fewer employers are redirecting care delivery to cheaper sites like the home, promoting precision medicine for cancers or reducing the risk of neonatal ICU claims through more generous fertility benefits. However, there’s interest in those strategies, according to NAHPC.