Report Details 3 Trends Driving Employers’ Health Care Costs

Pharmacy spending, high-cost claimants and newly developed anti-obesity drugs are expected to shape health benefits and affect the cost of care and health insurance for employers, according to a new report.

The “2024 Employee Health Trends” report by Springbuk, an online health intelligence platform, reflects concerns among employers and insurers about runaway drug costs due to increasingly expensive medications and new diabetes and anti-obesity drugs.

Also, the report looks at the effects of high-cost health plan enrollees, those who are high health care users either due to a chronic condition, cancer or an accident or illness that requires ongoing care.

One such employee enrolled in one of your group health insurance plans can result in massive costs that overshadow those of the rest of your workforce if you are a small or mid-sized employer.

High-Cost Claimants

According to Springbuk’s research:

  • One out of every 1,000 health plan enrollees is likely to account for total paid claims of $340,000.
  • Five out of every 1,000 members are likely to have total paid claims of over $140,000.
  • About one in five members in each high-cost category was in the same category in the previous year.

Common high-cost claim conditions include:

  • Various cancers
  • Multiple sclerosis
  • Heart disease
  • Cystic fibrosis
  • Sepsis
  • Joint degeneration
  • Chronic renal failure
  • Psoriasis
  • Adult rheumatoid arthritis
  • Inflammatory bowel disease

Springbuk’s report recommends the following:

  • Understand the population at greatest risk of becoming high-cost claimants based on conditions, history of being a high-cost claimant and demographic information.
  • To reduce surgical costs, the health plan can push for expert/second opinions, partner with a center of excellence, engage in payment-bundling arrangements, and pursue risk reduction.
  • Employ risk-reduction programs like weight-loss programs to lower the risk of surgery for degenerative arthritis.
  • Use preauthorization, step therapy and incentives to promote the use of biosimilars to reduce the costs of specialty drugs.
  • Use price transparency tools to determine which facilities are less costly, but make sure to consider the quality of care.

Pharmacy Spending

Between 2020 and 2023, the average per member per month pharmacy spend increased 38% from $86 to $119. Two of the biggest contributors to the rapidly rising drug spending are specialty drugs and brand-name medications used in the treatment of chronic conditions.

According to the report, the top 10 conditions contributing to health plan drug spending are:

  • Diabetes
  • Psoriasis
  • Inflammatory bowel disease
  • Adult rheumatoid arthritis
  • Asthma
  • Multiple sclerosis
  • Obesity
  • Other inflammation of the skin
  • Migraine headache
  • Attention deficit disorder

Since the majority of drug spending is related to chronic conditions, strategies focused on their main causes can help rein in spending. These include:

  • Healthy diet and lifestyle coaching,
  • Weight-loss courses and counseling,
  • Free gym memberships and other programs that emphasize the importance of exercise, and
  • Smoking cessation services.

Other recommendations:

  • Target brand-name drugs and specialty drugs in your cost-containment strategies.
  • Take steps to ensure members taking specialty and high-cost brand-name drugs are using generic formulations and biosimilars where available, provided the net cost is lower.
  • Understand the PBM contract.
  • Consider whether engaging with a clinical program partner that focuses on pharmacy savings opportunities would be cost-effective.
  • Medications or bariatric surgery may be considered for members who are not able to achieve or sustain weight loss.

One thing to consider about these medications is that they are helping your employees control their conditions and preventing complications or progression of the illness, thereby reducing other health care costs.

Obesity

More than 41% of Americans are considered clinically obese, defined as having a body mass index of 30 or more. Obesity is linked to a number of health conditions, which are all costly to treat, including diabetes, gastrointestinal disorders, heart disease, cancer and musculoskeletal disorders.

Enter highly expensive GLP-1 drugs, originally designed to treat diabetes, with one of their main side effects being that those who take them eat less and shed weight. As a result, demand for these pharmaceuticals has boomed, but not all health plans cover them.

Overall plan outlays for treating obesity jumped 40% in 2023 from the year prior, driven largely by an eye-popping 138% explosion in drug spending.

You can take steps to reduce these outlays for treating obesity by using step therapy, which entails first starting a program that is focused on diet, exercise and behavioral modifications. If those efforts fail, traditional weight-loss medications may be considered before moving to GLP-1 drugs or bariatric surgery.

Consider partnering with a clinical program that addresses obesity.

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