Employer strategies to address factors driving healthcare costs

Control GLP-1 utilization

Experts anticipated that GLP-1s would be a driving force behind higher healthcare spending in 2024 and they were correct. Over half of all survey participants (56%) said that GLP-1s contributed to these costs to a "great extent " or a "very great extent. " Almost all of the participants (96%) indicated that they covered GLP-1s for diabetes management and about two-thirds (67%) covered it for obesity treatment. Seven out of 10 employer participants reported being "very concerned" about GLP-1 use and long-term spending.

To manage GLP-1 costs, most employers implemented prior authorizations (87%). In the payer industry, there has been a major push to reduce prior authorizations due to their tendency to disrupt care. However, employers might view this tool as a way to restrict GLP-1 use in order to diminish spending.

Additionally, over half of the respondents also offered weight management programs (52%). Others applied certain eligibility factors, such as BMI thresholds or checking for comorbidities beyond the FDA indication, to limit employee use (51%).

Lower the price tag on high-cost therapies

High-cost therapies were the second most common driver of high healthcare spending, with 46% of employers saying that these treatments impacted costs to a "great extent" or "very great extent." Almost all employer participants were either "concerned" or "very concerned" about the affordability of higher-cost drugs (95%) and overall pharmacy costs (93%).

Employers responded to the threat of expensive therapies by implementing certain pharmaceutical cost-control measures. For example, in 2024, 55% of employer participants sought to maximize copay program benefits through pharmaceutical manufacturers. Also, 42% of the respondents indicated that they used new features or programs from their PBMs, and 40% changed prior authorizations to lower spending.

Additionally, many employers indicated that certain pharmaceutical cost-control strategies -- while not currently in place -- were a part of their plans. While only a quarter of employers reported that they worked with a transparent PBM in 2024, another 40% expected to use this approach in 2026 or 2027. Others intended to move to the lowest net cost formulary (21%) or institute programs that complement cash pay solutions (21%).

Offer cost-effective mental health solutions

The higher prevalence of mental health conditions was another factor leading to healthcare spending growth. A quarter of employers said that these conditions contributed to greater healthcare costs by a "very great extent" or a "great extent" and nearly half of the participants said that these conditions raised costs moderately (48%).

Employers addressed the mental health crisis through a variety of strategies. Seven out of ten employers offered telemental health opportunities for no- or low-cost virtual counseling, a slight dip from the previous year. Eight out of ten expected to use this strategy in 2025 (81%).

Additionally, 37% of employers included coverage for out-of-network mental health and substance use disorder treatment in 2024, and 40% expected to do so in the new year. On-site mental health counselors were another common strategy that 30% of employers used in 2024 and 37% planned to implement in 2025. Three out of ten respondents used centers of excellence for acute mental health conditions, and 43% plan to do so in 2026 or 2027.

Overall, employers are expanding in numerous directions to try to manage escalating healthcare costs. Over a quarter planned to hone their strategies for high-cost claims (27%). Another 25% will expand access to mental health services.

However, for some employers, controlling healthcare costs is more about trimming down than about expanding options. While a quarter of the participants said they would increase the number of services and solutions, another 18% planned to manage higher costs by consolidating or decreasing the number of solutions they offer.

Kelsey Waddill is a managing editor of Healthcare Payers and multimedia manager at Xtelligent Healthcare. She has covered health insurance news since 2019.