As 2025 approaches, corporate employers are grappling with a projection of rising healthcare costs that are expected to grow significantly. According to the Business Group on Health, the anticipated increase is 7.8%, marking the highest rate of growth in over a decade. Similarly, consulting firm Mercer forecasts a 5.8% rise in total health benefit costs per employee, despite attempts to mitigate these expenses (Mercer).
One of the main drivers of increased healthcare costs is the escalating price of pharmaceuticals. Specialty medications and advanced therapies such as cell and gene treatments are substantial contributors. The Business Group on Health reports that pharmacy costs constituted over a quarter of healthcare costs in 2023. The challenge is further exacerbated by hospital consolidations and non-competitive practices which distort the marketplace, as highlighted by the National Alliance of Healthcare Purchaser Coalitions.
Employers are not standing still in light of these figures. In an effort to manage these rising costs, they are scrutinizing their relationships with vendors, particularly health plans and pharmacy benefit managers (PBMs). This scrutiny involves demanding transparency in pricing and better quality care outcomes, which are increasingly accessed through medical claims data. In some cases, legal actions have been taken against insurers for withholding essential data needed to ensure value for the organization’s healthcare spending (e.g., the Kraft Heinz/Aetna case).
Beyond internal management strategies, industry leaders recognize that broad policy reforms are essential to address the root causes of these cost increases. These policy changes could foster a competitive market, enhance transparency, and drive more equitable pricing structures. Employers, particularly smaller enterprises, may lack the bargaining power of larger corporations, thus amplifying their challenges with healthcare affordability (Commonwealth Fund report).
In conclusion, while employers can implement measures to mitigate rising healthcare costs, a substantial decrease in these expenses likely requires systemic change driven by comprehensive public policy interventions.