Employers Seek Strategies to Combat Rising Health Care Costs

Rising health care costs threaten employer competitiveness and employee wages, but innovative strategies may help mitigate the impact, research by the National Alliance of Healthcare Purchaser Coalitions finds.

By: R&I Editorial Team | October 30, 2024

Topics: Employee Benefits | News

Employers that implement strategies like value-based drug formularies and tiered provider networks are experiencing lower health care costs, according to a survey by the National Alliance of Healthcare Purchaser Coalitions.

The survey, which included responses from 188 employers, sheds light on the ongoing challenge of rising health care costs and the various approaches being taken to address this issue, which has significant implications for both businesses and employees.

Rising premiums for employer-sponsored health insurance continue to be a significant concern for businesses across the United States. In 2023, the average annual premium for fully insured employer-sponsored health insurance reached $8,435 for single coverage and $23,968 for family coverage. Among survey respondents, 34% reported premiums higher than the average, while 33% were about even with the average, and 33% had lower than average premiums.

“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. “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.”

Nearly half, or 48%, of employers strongly agreed with the statement that rising health care costs impact their competitiveness in attracting and retaining talent, up from 44% in 2023 and 35% in 2022. Overall, 98% of employers agree or strongly agree that attracting and retaining employees is a top priority, and 96% said health and wellbeing benefits play a crucial role in those efforts.

Employers also believe that rising health care costs have a direct impact on their employees. According to the survey, 74% of employers believe that increasing health care costs often lead to reduced salary or wage increases, and the same percentage believes higher health care costs will lead to cost-shifting to employees.

Top Threats to Health Care Affordability

According to the survey, the most significant threats to affordability, as identified by employers, are drug prices (99%), high-cost claims (84%), and hospital prices (79%).

The high cost of prescription drugs has been a longstanding issue in the U.S. health care system, with many employers struggling to manage the rising costs of medications for their employees. Similarly, high-cost claims, such as those related to chronic conditions or catastrophic events, can put a significant strain on employer-sponsored health plans. Hospital prices, which often lack transparency and vary widely across different facilities, also contribute to the overall affordability crisis, according to the survey.

In addition to these top concerns, employers also identified other factors that exacerbate the affordability issue. These include a lack of transparency in health care pricing (59%), conflicts of interest among pharmacy benefit managers (PBMs) (55%), and the consolidation of health systems (54%).

The survey identified several health care strategies that correlated to lower-than-average health care costs:

Employers that use a value-based formulary for prescription drugs versus a rebate-driven approach were nearly three times more likely to have lower costs.
Employers that drive patients to higher quality and lower cost providers through tiered networks were twice as likely to experience lower costs.
Employers that eliminate the middleman by direct contracting with providers were 50% more likely to experience lower costs.

Many employers are considering new strategies related to their PBM contracts. The survey found that 52% of employers are considering changing their PBM in the next 1-3 years.

Employers are also increasingly interested in PBM strategies that promote transparency and flexibility, such as transparent revenue disclosure (25% already doing, 61% considering), comprehensive rebate definitions (30% doing, 58% considering), and the ability to customize formularies (33% doing, 50% considering).

Additional Survey Findings and Trends

Obesity management drugs: The survey revealed that 46% of employers currently cover branded GLP-1s for obesity management, while only 21% are considering coverage in the next 1-3 years. Among the two-thirds of employers that are currently covering or considering coverage of GLP-1s, most are looking for strategies to mitigate their costs. These strategies include limiting access to specific populations (91%) and tying access to beneficiary lifestyle changes (86%).
Women’s health benefits: Employers are broadening their women’s health benefits beyond coverage for reproductive and fertility care. The survey found that coverage for menopause has increased by 14%, and 44% of employers currently provide mental health support for women, with an additional 40% considering it.
Mental health care: Mental health integration is on the rise, with 67% of employers integrating behavioral health care into their in-network primary care services, up from 39% in 2023. Additionally, 48% of employers have established vendor performance/accountability metrics for mental health services.
Addressing health equity: Employers are increasingly focusing on addressing health equity by analyzing health claims and outcomes data. The survey found that 40% of employers analyze data by gender, and 37% analyze data by location. There is also a growing consideration for analyzing data by income levels (41%) and race/ethnicity (40%) over the next 1-3 years.
Health policy reforms: Employers are showing strong support for policy reforms that can improve transparency and fair pricing. The survey revealed that 89% of employers believe PBM reforms would be very or somewhat helpful, 87% support hospital price transparency, and 79% are interested in healthcare savings account (HSA) reforms.

View the full survey here. &

The R&I Editorial Team can be reached at [email protected].

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Not Your Average Workers’ Compensation and Auto PPO

Here are four reasons why Horizon Casualty Services is a leader in the workers’ comp and auto PPO space.

Horizon Casualty Services, Inc. (HCS), an affiliate of Horizon BCBS NJ (Horizon), is the cornerstone in the management of workers’ compensation (WC) and personal injury protection (PIP) services in New Jersey. Headquartered in Newark, NJ, HCS provides a service that each of us may need to access at some point, but only if faced with an injury in the workplace or in an automobile accident – something that we don’t often consider.

HCS is a state approved workers’ compensation managed care organization (WCMCO) that offers a comprehensive suite of administrative, provider network and medical management services. These services are designed to achieve the best possible outcomes for injured individuals and a few examples include:

1) Robust Network and Provider Directory Management: HCS identifies providers with WC and PIP experience and contracts with the services most needed by the injured individual. HCS is contracted with nearly all hospitals and all level 1 and level 2 trauma centers in the State of New Jersey. We identify initial treaters, specialists, physical therapy centers, ambulatory surgical centers, urgent care providers, diagnostic centers and more. Using a proprietary formula, the best providers are highlighted so that clients can rest assured their injured claimants are in the right hands.

2) Referral Services/Appointment Scheduling: HCS facilitates the referral of claimants to in-network providers to ensure they receive the most appropriate care at the most appropriate cost.

3) Utilization Management: When appropriate, HCS Registered Nurses work to summarize claimant discharges from hospitals. This process allows clients to have a clear and concise summary to determine next steps for managing the claim.

4) Monitoring and Evaluating Provider Performance: Registered Nurses continuously monitor and evaluate the performance of providers, as this is crucial to maintaining the quality of care within the network. HCS also offers clients, at no additional cost, access to the Outcomes Focused Network; a highly scrutinized subset of the overall network where each provider is rigorously reviewed by HCS nurses to ensure that they provide quality care, access in-network facilities and provider articulate causation statements.

Jackie Alonso, President of Horizon Casualty Services (HCS)

Jackie Alonso, President of HCS, has stated “HCS offers unparalleled service and an unbeatable PPO product in the NJ workers’ compensation and auto space. Coupled with our proprietary software, highly skilled and WC/PIP savvy team, and a deep understanding of the marketplace, HCS offers its clients an impeccable product with the deepest network discounts. We work lockstep with our Horizon peers and being backed by the largest healthcare carrier in NJ sets us apart and allows HCS to thrive in the community.”

Alonso continued, “this [2024] year, we made a concerted effort to get out into the community and have attended multiple fairs and conferences, as both participants and exhibitors. This shift in how we engage with our clients and prospects has allowed us to think more innovatively about how we evolve our products and services. Listening to the voice and feedback from all of our stakeholders and understanding it is about meeting them where they are at. This is how we maintain our impeccable product and showcase it across the region.”

HCS partners with providers and collaborates with them in the local community which allows clients to experience how a best-in-class WC and Auto PPO should work.

For More Information

For more information, email Jed Hoban, HCS Business Development Executive, at [email protected] or visit or visit https://www.horizonblue.com/horizoncasualty/.

About HCS

HCS, an affiliate of Horizon, in business since 1994, is a leading PPO in New Jersey WC and PIP. HCS has a 100% direct-contracted provider network that includes almost all New Jersey acute care hospitals. The network delivers significant overall savings and, with its deep focus on precision, an extremely low appeals rate. Its PPO results, combined with its Healthcare Value Strategy and Outcomes Focused Network, enable insurers to be the best at delivering quality medical care to claimants at the right cost — clearly a win-win for all. HCS and Horizon are independent licensees of the Blue Cross and Blue Shield Association.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Horizon Casualty Services, Inc. The editorial staff of Risk & Insurance had no role in its preparation.

Horizon Casualty Services Inc., an affiliate of Horizon Blue Cross Blue Shield of New Jersey, in business since 1994, is a leading PPO in New Jersey workers' compensation and personal injury protection. The company's 100% direct-contracted provider network includes almost all New Jersey acute care hospitals, significant overall WC savings and, with its deep focus on precision, an extremely low WC appeals rate of 0.2%. Its PPO results, combined with its WC healthcare value and OFN strategy, enables insurers to be the best at delivering quality medical care to claimants at the right cost — clearly a win-win for all.