As healthcare costs continue to climb, employers are facing an increasing financial burden. A recent analysis from Aon forecasts that employer-sponsored healthcare coverage in the U.S. will see a 9% rise in 2025, bringing the average cost per employee to over $16,000. This is a significant jump from the 6.4% increase seen between 2023 and 2024, when the average cost per employee was $14,823.
This sharp upward trend highlights the pressure on businesses to find effective ways to manage healthcare costs, which are exacerbated by inflation, rising drug prices, and expensive medical claims. However, experts agree that there are actionable strategies employers can adopt to help control these spiraling costs without compromising the quality of care for employees.
One of the major contributors to the rising healthcare expenses is the use of high-cost medications, particularly GLP-1 drugs like Ozempic and Wegovy, which are in high demand for treating obesity. While these drugs are effective, their price—ranging from $1,000 to $1,500 per month per patient—poses a significant challenge for employers.
To tackle this issue, Rae McMahan, Senior Vice President of Payor Solutions at Prescryptive Health, suggests several strategies to reduce the financial impact of these medications:
Negotiate Direct Contracts: Employers should explore direct pricing agreements with drug manufacturers to lower costs.
Maximize Coupon Usage: Ensure employees are utilizing available drug coupons, and that pharmacies and third-party administrators process these discounts correctly.
Align Drug and Medical Coverage: Work with pharmacy benefit managers (PBMs) to align drug coverage with medical care criteria to optimize costs and rebates.
Prior Authorization Reviews: Review prior authorization processes to ensure they are consistent with the indications on the drug label, minimizing unnecessary spend.
To curb costs, employers are also turning to utilization control initiatives. According to a recent survey from the International Foundation of Employee Benefit Plans (IFEBP), 27% of employers are now using strategies like prior authorizations, disease management programs, and nurse advice lines to control healthcare spending—a notable increase from 22% the previous year.
Julie Stich, Vice President of Content at IFEBP, emphasized the importance of such initiatives, noting that “employers have been increasingly focused on ensuring adherence to medication regimens and managing potential side effects through more robust case management and prior authorization strategies.”
Another effective way to manage healthcare costs is by promoting healthier lifestyles among employees. Oliver Ayres, President of Key Benefit Administrators, advocates for integrating wellness programs that encourage employees to adopt healthier habits. “Providing access to telehealth services and health coaching can support employees in managing their health more proactively, which can lead to better outcomes and lower healthcare costs,” he said.
In an era of skyrocketing costs, some employers are looking at cost-sharing measures, such as raising deductibles and implementing higher out-of-pocket expenses for employees. Tracy Watts, National Leader for U.S. Healthcare Policy at Mercer, explained that while these strategies may help control costs, they also require a delicate balance. “Employers want to ensure healthcare remains affordable for employees, but they also need to manage costs to maintain long-term sustainability for the organization.”
Mercer data highlights an increase in the use of behavioral health services, a trend that has the potential to reduce overall healthcare costs. Jennifer Birdsall, Clinical Psychologist and Director at ComPsych, emphasizes the value of supporting employee mental health: “Organizations that prioritize mental health—through stress management programs, mental health apps, and fostering a healthy work environment—can significantly lower overall healthcare costs by preventing more serious, costly health issues from arising.”
Lastly, McMahan highlights the need for employers to better understand the interplay between medical and pharmacy benefits, especially when it comes to specialty drugs. “A comprehensive approach to managing both medical and pharmacy expenses is crucial,” she said. “Employers should work closely with their consultants to ensure that all programs are aligned and complementary, not contradictory, in managing healthcare costs.”
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