The Pulse from UnitedHealthcare: Cost trends facing employers

One of the most pressing concerns for employers is the financial pressure associated with providing insurance to their workforces. Health care costs have been on the rise persistently over the last few years, and they’re showing no signs of abating. This is taking a significant toll on employers' budgets, especially in an uncertain economic environment.

Recently, I sat down to explain some of what I’m hearing from employers, and below I break down those trends even further:

Over the last few years, we’ve seen employers take a protective stance toward their employees, striving to shield them from the rising costs of health care with a desire to enhance benefits and focus on employee retention and attraction. However, the prolonged period of high-cost trend is compelling a shift in this mindset: Many employers feel almost forced to raise deductibles or increase their employees’ health care contributions as a way to manage their costs, even if it may create friction with their employees.

In the past 5 or so years, there's been a surge in point solutions — programs targeting the management and coordination of specific health conditions — which, though valuable, have become overwhelming for employers to manage. We believe this has led to a growing interest in streamlining and consolidating these programs — an approach consultants strongly support, too. They are looking for solutions that offer best-in-class pricing and added benefit features, making it easier for employers to plug and play these solutions into their existing benefit packages, which is where resources like UHC Hub^TM can  become helpful, since it features a selection of health and wellness offerings that employers can sponsor for their employees and manage in streamlined fashion.

Another significant factor contributing to high costs is the emergence of gene therapy drugs. These drugs, while revolutionary in their ability to treat previously untreatable conditions, come with a hefty price tag. For individual employers, the impact can be substantial if a member requires one of these treatments. The number of gene therapy drugs is increasing, and, with each new drug, the likelihood of encountering a high-cost claim rises. Employers are now considering how to handle these situations in a cost-effective manner, and this is where we see the value of integrated pharmacy and medical benefits, which may help find those opportunities for cost savings. Employers may also gain protection and insulation from high-cost claims through special stop-loss insurance for gene therapies.

GLP-1 drugs, primarily used for treating obesity and diabetes, are another source of financial pressure. The uptake rate for these drugs continues to grow, and it is expected to increase further over the next few years. Even employers who initially decided not to cover these drugs for weight loss are finding themselves in a challenging position. As GLP-1 drugs gain approval for additional conditions, they can enter the plan through a "backdoor" method, adding to overall cost. This trend is affecting many plans, regardless of their initial stance on covering obesity treatments, and employers are grappling with how to manage this growing expense.

Mental health claims have been a significant driver of cost trends for some time. When analyzing their spend categories, high mental health utilization is often a category that is creeping up. Employers are increasingly aware of the importance of mental health and are looking for ways to provide support while managing costs. This involves evaluating the value of existing mental health programs and exploring new, more efficient solutions, such as lower-cost support for lower severity issues.

Given the limited pool of resources, employers are becoming more strategic about where they allocate their funds within their health plans. The question on many employers' minds is, "What is bringing me the most value?" This involves a thorough assessment of the programs they have chosen and identifying which ones are delivering the highest ROI. Employers are looking for ways to optimize their benefits packages to ensure that they are providing the most effective and efficient care to their employees.

The landscape of employer-provided insurance is complex and ever-changing. Financial pressure from elevated cost trends, the need to simplify benefit design, the emergence of high-cost gene therapy drugs and the ongoing challenge of mental health claims are all factors that employers must navigate. By adopting a more strategic and cost-conscious approach, employers can continue to offer valuable benefits to their workforce while managing their financial responsibilities. The key lies in finding the right balance between protection and cost control, and in leveraging efficient solutions to address the unique needs of their employees.