According to a new report from Gallagher, employers said that high costs of medical services and specialty drugs, including GLP-1 medications for weight loss, were their top two healthcare cost management challenges.

Infographic: Investigating the high costs in employer-sponsored insurance

Employers are concerned about high medical, drug costs

For the report, Gallagher surveyed 3,552 organizations across the United States about current trends in employer healthcare costs.

Currently, only 52% of employers said they effectively manage healthcare costs.

Overall, 92% of respondents said their health plan premiums increased during their most recent renewal. Of these respondents, 24% said that they experienced double-digit increases in premium costs.

According to employers, their top two healthcare cost management challenges are high costs of medical services (68%) and specialty drugs (44%). These specialty drugs include GLP-1 medications and other weight-loss drugs, and employers are currently evaluating whether they are worth their high prices.

As expensive weight-loss drugs become more popular, more employers are implementing utilization management, including prior authorization. In addition, 52% of employers are linking coverage of weight-loss drugs to ongoing participation in weight-management programs.

"The advantages of new treatments for obesity and excess weight are evident, but the significant cost associated with these medications cannot be ignored," said William Ziebell, CEO of Gallagher's benefits and HR consulting division.

"Employers that successfully navigate this challenge tend to take a mindful approach to their benefits design," Ziebell said. "For example, they may require an employee clear a body mass index threshold and actively participate in an employer-sponsored wellbeing program before they cover GLP-1 prescription costs. A holistic strategy, such as this, will likely result in better outcomes, as well as improved employee engagement."

How employers are managing healthcare costs, supporting workers

To combat rising healthcare costs, 80% of respondents said they offer more than one health plan. Currently, the fastest growing type of health plan is consumer-directed health plans (CDHP) with health savings accounts (HSAs).

Among the respondents, 56% said they offer lower-cost CDHPs with HSAs, a 16-percentage point increase from those who said the same in 2020. Nearly a quarter of these employers (24%) said they have more employees enrolled in CDHP plans with HSAs than any other plan.

Employers are also turning to value-based care to provide better care at lower costs. For example, 17% said they reduced the cost of prescription drugs for chronic conditions, and 14% said they incentivize employees to use designated centers of excellence for certain medical procedures. These incentives include lower out-of-pocket costs and travel accommodations.

Employers have also been concerned about mental health support, with 70% expressing concern about the impact of stress and burnout on their employees. However, only 42% of respondents said their managers are well equipped to refer employees to mental health support services.

To increase mental health support, 22% of respondents said they now offer training for HR and managers, a five-percentage point increase from 2022.

"It's important for decision-makers to understand the diverse needs of their workforce and use this as a guide to create a benefits offering that will appeal to them," Ziebell said. "Where many employers fall short is by failing to communicate when and how to use specific benefits, and their value. By ensuring that employees are well-informed and equipped with the necessary information to utilize their available benefits, employers can improve employee engagement and bolster retention." (Asplund, Crain's Chicago Business/Modern Healthcare, 8/2; Christ, HR Dive, 8/1; Gallagher, PR Newswire, 7/30)