Employers are concerned that rising healthcare costs could force them to rethink salary or wage increases, according to a new study.
The National Alliance of Healthcare Purchaser Coalitions released its 2024 “Pulse of the Purchaser” survey, which polled 188 employers across multiple organizations. About three-quarters (74%) of those surveyed said they feel healthcare costs drive trade-offs for wage or salary increases, with 38% saying they “strongly agree” that this is the case.
In addition, 74% said they believe that rising costs will force them to shift more expenses to workers.
“The unending cycle of year-over-year cost increases for employers, employees and their families has long exceeded sustainability and adds real stress to the economy,” said Shawn Gremminger, National Alliance president and CEO, in a press release.
“These uncontrolled costs directly lead to smaller raises, lost jobs, and the inability of working families to afford care, and is perhaps the primary driver of health inequity,” Gremminger said. “And for employers, it’s no longer just about cost control. It’s about survival.”
The survey found that prescription drugs, high-cost claims and hospital prices are the three biggest cost concerns for employers. Almost all (99%) of those surveyed said they believe drug prices in particular are a “significant threat” to affordability.
Most (84%) said the same about high-cost claims, and 79% said that they believe hospital prices pose a “significant threat.”
The survey found that the average premium in fully insured plans was $8,435 for individuals and $23,968 for family coverage. About a third (34%) of those surveyed said this was higher than average, while 33% said these costs were on par with their average.
Some surveyed said they found alternative strategies to manage costs and benefits, while others expressed frustration at factors beyond their control, such as geography and regulations. One employer, for instance, said they are “held hostage” by an expensive provider network simply by operating in Indiana.
“It’s not just about cost control anymore; it’s about survival,” one survey respondent said.
More than half (52%) of those surveyed said they are considering a switch in which pharmacy benefit manager they contract with in the next one to three years. Most (72%) were clients of one of the industry’s “big three” companies: CVS Caremark, Express Scripts or Optum Rx.
Twelve percent said they contract with a transparent PBM, while 16% said they contract with any of the others on the market.
Employers that said they were considering a PBM change responded that they were looking for more transparent contracting and pricing as well as the ability to have more control over the formulary and other options.
Most of those surveyed said they were looking to promote biosimilar use to address costs as well as instate full and independent audit rights for PBM contracts and rebates in the next several years. Plus, 94% said they would seek confirmation that their benefits advisers are not compensated, whether directly or indirectly, by the PBM.
The survey also examines how employers are looking to address high-cost claims. Forty-five percent said they are looking at leaning into enhanced screening and early detection programs, and 40% said they’re considering redirecting to other sites of care.
More than half (55%) said they’re looking to reduce the risk of claims for the neonatal ICU, taking steps like rolling out new fertility benefits or managed maternity care options.