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Digital EditionEmployers Embrace Strategies to Improve Health Care Affordability
U.S. employers are seeking innovative strategies beyond traditional cost-shifting to combat rising health care costs, including steering employees towards lower-cost, higher-quality providers and adopting new technology solutions, according to the WTW 2024 Best Practices in Healthcare Survey.
The survey, conducted in June and July 2024 with 417 employers representing 6 million employees, found that while health plan costs are projected to rise in 2025, over half of employers plan to implement programs to reduce total costs and steer employees to lower-cost, higher-quality providers.
U.S. employers project their health care costs will increase by 7.7% in 2025, up from 6.9% in 2024 and 6.5% in 2023, according to the survey. In response, employers are embracing new strategies to improve health care affordability.
The survey found that more than half of employers (52%) plan to implement programs that will reduce their total health care costs. An equal number (51%) intend to adopt plan design and network strategies that steer employees to lower-cost, higher-quality providers and care sites. In contrast, only 34% expect to shift more costs to workers through higher premium contributions, and just 20% will promote high-deductible health plans.
“To tackle high prices and other causes driving increased spending, companies are pursuing initiatives that are beyond cost-shifting,” said Tim Stawicki, chief actuary, Health & Benefits, at WTW. Rather than simply passing rising costs on to employees, employers are taking a more proactive approach to control health care spending at the source while still supporting employee health and wellbeing.
Other tactics employers expect to use over the next two years include taking vendor/health plans out to bid, cited by 43%, while 38% plan to evaluate employee assistance and mental health programs, 30% will explore narrow networks, and 25% are considering centers of excellence.
To support affordability and employee wellbeing, key focus areas include obesity and weight management (40%), cancer and oncology (34%), cardiovascular health (28%), and women’s health (27%), WTW reported.
Prescription Drug Benefits
On the pharmacy front, a growing number of companies are “carving out” these benefits from their health plans and contracting directly with a pharmacy benefits manager, WTW found. A full 73% of employers surveyed plan to take this approach over the next few years to gain more control over formularies and costs. Over a quarter (27%) are even considering smaller PBMs that offer alternative pricing models.
Some 21% of employers planning to promote drug discount cards or direct-to-consumer prescription delivery in the next two years to lower out-of-pocket costs for employees. Another 18% expect to allow members to purchase drugs through retail or “cost plus” outlets, while 17% anticipate having an acquisition cost PBM contract structure.
With continued demand for high-cost weight loss medications, employers are eager for safe and effective lower-cost alternatives. Nearly half (48%) expressed interest in compounded GLP-1 medications, which are available through certain vendors at much lower costs compared to current obesity drugs.
Leveraging Technology
Many employers are turning to technology solutions to help manage expenses and improve the member experience, WTW found. More than half, or 54%, of employers are exploring navigation or technology platforms that share provider price and quality information directly with members. This transparency empowers employees to make more informed decisions about their care.
Artificial intelligence is seen as a key enabler for these solutions. Nearly two-thirds of employers (64%) believe AI has the greatest potential in powering navigation tools that guide members to high-quality, cost-effective providers. Another 58% see strong opportunities to leverage AI for enhancing benefits communication and engagement with employees.
Read the full report here. &
