Employers are bracing themselves for a significant spike in healthcare costs once again in 2025. This impending increase is likely to prompt these firms to embark on substantial transformations, as experts have pointed out. The Business Group on Health's annual examination of trends reveals that healthcare costs are set to rise by the largest margin in a decade next year. A survey conducted in September by Mercer found that employers expect costs to go up by 5.8% in 2025, marking the third consecutive year of at least a 5% increase. Ellen Kelsay, the CEO of the Business Group, informed Fierce Healthcare that while employers have numerous concerns to address, "costs are growing at truly unsustainable and impractical levels." She emphasized that "first and foremost, it is a healthcare cost story, and it has always been so. However, this year, it is unusually alarming and concerning. Therefore, I must lead with this being the most top-of-mind issue."Chronic Conditions and Their Impact on Costs
There are a plethora of factors influencing the cost equation, as Kelsay stated. One such factor is the increasing number of chronic conditions and the associated expenses. The Business Group's members have reported that cancer, diabetes, and musculoskeletal needs are particularly costly. In addition to the rising number of diagnoses for chronic conditions, the acuity is also higher, making the cost pressures even more challenging. Kelsay explained that "the array of conditions is expanding, the patient population with these conditions is growing, and the conditions themselves are worsening. They are not getting better." This situation is a recipe for a great deal of concern regarding general wellbeing and the emphasis on prevention.Pharmacy Costs and Their Challenges
Another major element at play is pharmacy costs. This is a trend that the Business Group and its members have been closely monitoring for nearly a decade, including both everyday prescriptions and high-price specialty pharmacy. Kelsay mentioned that there is a lack of transparency in this space, which alarms employers. They have concerns about "dysfunction within the pharmacy supply chain." The continued interest and demand for GLP-1s are emblematic of the broader ecosystem, but it is not a one-off challenge. Obesity and diabetes are significant cost drivers for employers, and these treatments are difficult to obtain and often come at a high cost. Kelsay emphasized that "the pharmacy issue is not a GLP-1 issue. These issues and concerns existed long before GLP-1s."Washington pointed out that part of the challenge with GLP-1s specifically is that these drugs already have the potential to reach a large population, and they are gaining additional indications over time, which can further expand the patient pool. Concerns in the pharmacy space have led plan sponsors to closely examine their pharmacy benefit management contracts and other solutions to identify areas where they can make some cost savings. An excellent example is the team at Blue Shield of California, which is fully launching its new Pharmacy Care Reimagined model in January. Angie Kalousek Ebrahimi, the senior director for lifestyle medicine at Blue Shield, informed Fierce that the response to the program has been positive. She said, "I think people are applauding the chutzpah of the health plan for moving forward without the PBMs and significantly reducing costs in that way."Solution Fatigue and the Search for Effective Partners
Challenges with PBMs are a microcosm of a broader issue facing employers: solution fatigue and the struggle to find vendors and partners that will truly address the needs of their workers. Ebrahimi emphasized that drilling down to the most effective programs is crucial as these are what will support members between doctor visits. It also addresses the cost challenges as identifying what works most effectively will help eliminate unnecessary costs. Employers are also "bombarded" with different point solutions, and sifting through these offerings is a time-consuming challenge. Ebrahimi stated, "Certainly, one of the trends in 2025 is that healthcare costs are increasing. Therefore, we need to be much smarter about how we are deploying targeted programs for people that actually make a difference."Washington explained that employers seek expert feedback on which vendors to rely on as they may not feel qualified in many industries to determine the efficacy of healthcare services. However, they also recognize the clear need for change and the fact that other industries are much better at designing consumer-friendly experiences. For instance, a patient with elevated cholesterol and prediabetes could have access to high-functioning solutions for cholesterol management, diabetes, and weight loss, but they are often bombarded with duplicate alerts and information. He said, "Does any individual want three nudges at noon to ensure they consider a salad for lunch?" Therefore, they are looking for more comprehensive programs that cover a wider range of aspects, which is where companies like Verily can truly succeed. He added, "Businesses are smart. They wouldn't be making these purchases if they didn't believe there was some value. So, they think that the system is not delivering all it should."
