Employers using various strategies to contain healthcare costs


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While premiums for employer-sponsored health insurance continue to rise each year, employers who have been engaged in novel strategies – such as value-based drug formularies and tiered provider networks based on price and quality – experienced lower-than-average healthcare costs, finds a new survey from the National Alliance of Healthcare Purchaser Coalitions.
The Pulse of the Purchaser study gauged concerns and approaches of employers to address the workforce environment; women’s health; obesity management; mental health; equity; pharmaceutical drug and hospital prices; high-cost claims; fiduciary strategies; and potential health reforms.
The study uncovered a number of strategies that were correlated to lower costs. For example, employers who use a value-based formulary as opposed to a rebate-driven formulary are nearly three times more likely to have lower spending than average.
Employers who drive patients to higher-quality and lower-cost providers through tiered networks are twice as likely to experience lower costs, the survey found. And employers who eliminate the middleman by direct contracting with providers are 50% more likely to experience lower-than-average costs.
WHAT’S THE IMPACT
The online poll of 188 employers, each a member of coalitions affiliated with the National Alliance, was conducted in September and October, with organizations representing manufacturing; educational services; public administration; finance and insurance; and healthcare and social assistance institutions.
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.
Consistent with surveys over the last four years, more than 8 out of 10 employers consider drug prices, high-cost claims, and hospital prices to be the biggest threats to affordability, with almost 100% noting drug prices as a significant threat.
The survey found that employers are increasingly supportive of policy reforms that can improve transparency and fair pricing, with almost 90% saying PBM reforms would be very or somewhat helpful, while 87% support hospital price transparency.
More than half of employers (52%) are considering changing their pharmacy benefit manager in the next one to three years, while 48% indicated they are not planning to change. The fastest-growing PBM strategies include confirming transparent revenue disclosure (61% considering); comprehensive rebate definition (58% considering); and flexibility to customize formulary (50% considering).
While 46% of employers said they cover branded GLP-1s for obesity management, only 21% are considering coverage in the next one to three years. Of the two-thirds of employers that are currently or considering coverage of GLP-1s, most are looking for strategies to mitigate their costs, such as limiting access to specific populations (91%) and tying access to beneficiary lifestyle change (86%).
Meanwhile, women’s health benefits are broadening beyond coverage for reproductive and fertility care to include menopause (up 14%) and mental health support, with 44% currently doing and 40% considering. For mental health, 48% of employers have established vendor accountability metrics.
When addressing health equity, 40% are focused on analyzing health claims and outcomes data by gender (40%) and location (37%), with a growing number considering including income levels (41%) and race/ethnicity (40%) over the next one to three years.
THE LARGER TREND
A September Mercer survey found total health benefit cost per employee is expected to rise 5.8% on average in 2025, even after accounting for planned cost-reduction measures
Smaller employers (those with 50-499 employees), which typically have fully insured health plans, have been hit the hardest. They reported that cost would rise by about 9% on average if they took no action.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.