While premiums for employer-sponsored health insurance continue to rise each year, about three-quarters (74%) of those surveyed saying they feel healthcare costs drive trade-offs for wage or salary increases, with 38% saying they "strongly agree" that this is the case. The percentage of employers strongly agreeing that rising healthcare costs impact their ability to compete has steadily increased each year from 35% in 2022 to 48% in 2024.
"The unending cycle of year-over-year cost increases for employers and employees and their families has long exceeded sustainability and adds real stress to the economy," said Shawn Gremminger, National Alliance president and CEO in a press release. "These uncontrolled costs directly lead to smaller raises, lost jobs, and the inability of working families to afford care, and is perhaps the primary driver of health inequity. And for employers, it's no longer just about cost control. It's about survival."
Some surveyed said they found alternative strategies to manage costs and benefits, while others expressed frustration at factors beyond their control, such as geography and regulations. One employer, for instance, said they are "held hostage" by an expensive provider network simply by operating in Indiana.
In particular, employers that drive patients to higher quality and lower cost providers through tiered networks are twice as likely to experience lower costs; and employers that eliminate the middleman by direct contracting with providers are 50% more likely to experience lower than average costs. Employers that use a value-based formulary versus a rebate-driven are nearly three times more likely to have lower spending than average.
The survey also examines how employers are looking to address high-cost claims. 45% said they are looking at leaning into enhanced screening and early detection programs, and 40% said they're considering redirecting to other sites of care.
Respondents reported their biggest concern is growing drug costs, with 99% of employers agreeing it’s a significant threat, followed by high-cost claims and hospital prices. A significant portion of the cost growth is being driven by rising demand for GLP-1s. 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.
Employers are also looking to reshape their pharmacy benefits to curb costs. 72% 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, as well as the ability to have more control over the formulary and other options.
Most of those surveyed said they were looking to promote biosimilar use to address costs as well as instate full and independent audit rights for PBM contracts and rebates in the next several years. Plus, 94% said they would seek confirmation that their benefits advisers are not compensated, whether directly or indirectly, by the PBM.
