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Employer strategies to address factors driving healthcare costs
High healthcare costs have motivated employers to think creatively about their benefits and strategies, from rethinking their partnerships with PBMs to finding ways to limit GLP-1 utilization.
As healthcare cost trends project nearly 8% growth in 2025, it is no surprise that healthcare costs are directing employers' health and well-being strategies, according to a survey from Business Group on Health.
Business Group on Health received responses from 125 employers, sharing insight into their circumstances and strategies going into 2025. The survey participants represented over 17 million covered, American lives.
Employers' top priority was addressing healthcare costs overall. In fact, the four most common health and well-being priorities were related to spending: overall healthcare costs, affordability for employees, affordability for the company and pharmacy costs, in that order.
These priorities are unsurprising given the mounting financial pressures employers face which many employer-sponsored healthcare leaders have characterized as unsustainable. The healthcare cost trend in 2024 and 2025 is expected to grow by 7.2% and 7.8%, respectively. The Business Group on Health report estimated that total employer costs have increased by $1,438 per employee from 2023 to 2024.
Chronic disease treatments, the proliferation of mental health conditions and pharmacy spending drive these numbers higher each year, employers indicated.
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.
