Healthcare costs at a post-pandemic high, US employers prioritize affordability and wellbeing

Rhea-AI Summary

WTW's 2024 Best Practices in Healthcare Survey reveals that U.S. employers project healthcare costs to increase by 7.7% in 2025, up from 6.9% in 2024 and 6.5% in 2023. To address this post-pandemic high, employers are focusing on cost-effective plan designs and employee wellbeing rather than traditional cost-shifting strategies.

Key findings include:

• 52% plan to implement programs reducing total costs
• 51% intend to adopt strategies steering to lower-cost, higher-quality providers
• Only 34% expect to shift costs to employees through premium contributions
• 54% are exploring navigation technology for provider price and quality information

Employers are also prioritizing obesity management, cancer care, cardiovascular health, and women's health. The survey highlights interest in AI applications for navigation solutions (64%) and communication (58%) in health benefits.

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Plan redesign outweighs cost-shifting to reduce the cost of care, WTW survey finds

NEW YORK, Sept. 26, 2024 (GLOBE NEWSWIRE) -- As the cost of healthcare in the U.S. rises to a record high since the COVID-19 pandemic, nearly half of employers expect healthcare costs will exceed budget projections this year. In response, employers are embracing different approaches to safeguard program affordability for their companies as well as for their employees. While focusing on more competitive, cost-effective plan designs to control costs, they are seeking to maintain employee wellbeing, according to a new survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.

WTW’s 2024 Best Practices in Healthcare Survey found that U.S. employers project their healthcare costs will increase by 7.7% in 2025, compared with 6.9% in 2024 and 6.5% in 2023. As a result of this uptick in costs, employers are reaching beyond traditional cost-shifting strategies to improve healthcare affordability and employee health. More than half of employers (52%) plan to implement programs that will reduce total costs, and just as many (51%) intend to adopt plan design and network strategies that steer to lower-cost, higher-quality providers and sites of care. Only 34% expect to shift costs to employees through premium contributions, and just 20% will promote account-based health plans or high-deductible health plans.

“The cost of healthcare has been rising steadily for years. With cost increases reaching a post-pandemic high, companies are concerned about the burden it’s putting on their workforces, especially since it affects decisions about insurance coverage and care,” said Tim Stawicki, chief actuary, Health & Benefits, WTW. “To tackle high prices and other causes driving increased spending, companies are pursuing initiatives that are beyond cost-shifting.”

These initiatives are focused within the prescription drug space as well, with strong interest in alternative drug channels and pricing. According to the survey, 21% of employers are planning for or considering promoting drug discount cards or direct-to-consumer prescription delivery to lower out-of-pocket costs in the next two years; 18% expect to allow members to purchase drugs through a retail or “cost plus” outlet, and 17% expect to have an acquisition cost pharmacy benefit manager (PBM) contract structure.

Other proactive efforts to control costs over the next two years include taking vendor/health plans out to bid (43%), evaluating employee assistance programs/mental health programs (38%), and exploring narrow networks (30%) and centers of excellence (25%). Additionally, employers continue to explore new technology-enabled solutions for managing costs, with 54% exploring navigation or technology that shares provider price and quality information with members.

To support affordability and employee wellbeing, employers’ top focus areas are obesity and weight management (40%), cancer and oncology (34%), cardiovascular health (28%) and women’s health (27%).

Employers are still contending with the continued demand for high-cost weight loss medications. While most employers are maintaining coverage for obesity medications with some restrictions, those not offering coverage today state cost and safety as the biggest barriers. Employers are eager to consider safe and effective lower-cost alternatives; 48% of employers expressed interest in compounded GLP-1 medications available through certain vendors at much lower costs.

“To navigate the current healthcare environment, companies need to proactively address cost challenges and implement effective risk management strategies,” said Courtney Stubblefield, managing director, Health & Benefits, WTW. “By doing so, they can mitigate financial risks, support the wellbeing of their workforce and achieve long-term sustainability.”

Other survey findings:

• Employers report the greatest opportunities for artificial intelligence in supporting health and benefits are navigation solutions (64%) and communication (58%).
  
  
• More than two-thirds (67%) of employers provide coverage for fertility services beyond diagnosis of infertility, including in vitro fertilization and medications.
  
  
• To lower costs, 73% of employers plan to carve out pharmacy benefits over the next few years, and 27% would consider a smaller PBM that offers alternate pricing models.
  

About the survey

A total of 417 employers participated in the 2024 Best Practices in Healthcare Survey, which was conducted in June and July 2024. Respondents employ 6 million employees.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

Media contacts:

Ileana Feoli
ileana.feoli@wtwco.com

Stacy Bronstein
stacy.bronstein@wtwco.com

FAQ

What is the projected healthcare cost increase for U.S. employers in 2025 according to WTW's survey?

According to WTW's 2024 Best Practices in Healthcare Survey, U.S. employers project their healthcare costs will increase by 7.7% in 2025.

How are employers addressing rising healthcare costs instead of cost-shifting to employees?

Employers are focusing on implementing cost-effective plan designs, adopting strategies to steer towards lower-cost, higher-quality providers, and exploring technology-enabled solutions like navigation tools that share provider price and quality information with members.

What percentage of employers plan to shift healthcare costs to employees through premium contributions?

Only 34% of employers expect to shift costs to employees through premium contributions, according to the WTW survey.

What are the top focus areas for employers to support affordability and employee wellbeing?

The top focus areas for employers are obesity and weight management (40%), cancer and oncology (34%), cardiovascular health (28%), and women's health (27%).

How are employers addressing the demand for high-cost weight loss medications?

While most employers are maintaining coverage for obesity medications with some restrictions, 48% expressed interest in compounded GLP-1 medications available through certain vendors at much lower costs.