Healthcare spending continues to plague employers — but most aren't yet taking sizable steps to curb costs.
Nearly 85% of employers say surging healthcare prices are their biggest benefits challenge, according to a survey of about 1,800 plan sponsors nationwide published Wednesday from insurance brokerage and consulting company Lockton.
Related: Optum, CVS, Express Scripts GLP-1 programs entice employers
Employers are bracing for healthcare costs to balloon 6%-8% this year, especially as workers seek more expensive specialty care.
Although the company surveyed fully insured and self-funded health plans, the report primarily focused on findings from the latter, which take on the financial risk associated with providing coverage and have greater control over plan design.
Lockton found that two-thirds of self-funded employers are looking to contain costs by focusing on specialty pharmacy spending, including by requiring employees to receive specialty medications from a specialty pharmacy and separating specialty pharmacy management from their carrier or pharmacy benefit manager.
Still, the survey found most employers aren't taking steps that could be disruptive to employees, such as contracting directly with providers, using reference-based pricing or excluding spouses from coverage.
Instead, the report showed that companies were mostly interested in adding patient navigation services, using high-performing provider networks and educating employees over 65 years old on Medicare coverage. Lockton identified these methods as causing less disruption for members but generating fewer cost savings for plan sponsors.
“Continuing to delay meaningful action, however, could make it more difficult to achieve cost savings, ultimately leading to tougher decisions down the line," the report said.
Interest in reducing costs has ticked up in Lockton's annual reports, with 38% of employers this year saying it is the top factor in benefits decisions, compared with 29% last year, 22% in 2023 and 20% in 2022. In addition, for the first time in the six years Lockton has surveyed companies on health benefits, more employers are prioritizing cutting healthcare costs over attracting and retaining talent.
Even amid cost challenges, employers are spending more in certain areas with the aim of driving down costs long-term, including through offering weight-loss options. According to the survey, 29% of self-funded employers cover glucagon-like peptide-1 agonists, or GLP-1s, for weight loss and one-third of companies cover lifestyle and nutrition programs.
“We’d love to see more plan sponsors focus their cost reduction efforts in key areas like network solutions, eligibility management, pharmacy selection and the various different ways they can approach optimizing their plans. The successful organizations will be those that use data to identify the highest-impact options in each of these areas and those that can firmly tie benefit changes into their core philosophies and values," Chris Bartnik, senior vice president and people solutions growth and innovation leader at Lockton, said in a news release.
