Rise in Medical Cost & Strategic Insights for Large Group Businesses in 2025

August 13, 2024

The complexity of healthcare costs continues to pose significant challenges for large group employers with over 50 employees. With a projected growth rate of 8.0% in medical costs, it’s crucial for decision-makers to strategically manage their health insurance plans. This blog will delve deeper into the trends driving these costs and offer insightful, actionable strategies for large employers to mitigate financial pressures while ensuring robust employee health benefits.

Drivers of Healthcare Cost Increases

The Persistent Impact of Inflation

Inflation continues to exert significant pressure across all economic sectors, including healthcare. For large employers, this translates into navigating increased costs for medical services and supplies, significantly affecting premiums and employee out-of-pocket expenses. This inflationary pressure forces providers to seek higher margins, inevitably pushing costs onto health plans and, subsequently, employers and employees. Addressing this requires strategic planning and negotiation to keep healthcare benefits sustainable without compromising on the quality of care provided.

The Escalating Costs of Prescription Drugs

The healthcare sector is experiencing significant inflation, particularly from high-cost prescription drugs targeting chronic conditions such as diabetes and obesity. Drugs like GLP-1 receptor agonists have revolutionized diabetes and weight management but come at steep prices that significantly impact overall medical costs for group health plans. Employers must navigate these costs carefully, balancing the introduction of innovative treatments with the financial realities of their health plans.

Increasing Demand for Behavioral Health Services

The demand for behavioral health services has surged in the post-pandemic era, with a significant rise in costs associated with behavioral health utilization. This underscores the need for large employers to expand access to these essential services, despite the higher costs, to support employee well-being effectively. Enhanced mental health services are not only a moral imperative but also a strategic one, as they contribute to overall employee productivity and satisfaction.

Strategic Cost Containment Approaches

Embracing Biosimilars

To combat the rising costs associated with biologic drugs, embracing biosimilars offers a cost-effective alternative without compromising therapeutic benefits. This approach is seen as a critical cost deflator that can help manage pharmacy spending within large group health plans. By advocating for and incorporating biosimilars, large employers can reduce pharmacy spending significantly, thereby maintaining the affordability of their health plans.

Total Cost of Care Management

Effective management of the total cost of care involves a holistic approach, focusing on preventive care and managing chronic conditions efficiently. This strategy helps in reducing the need for high-cost medical interventions by maintaining the overall health of the workforce through strategic investments in health management programs and technologies. Employers can implement targeted wellness programs and chronic disease management strategies that reduce the occurrence of high-cost health episodes.

Enhancing Mental Health Benefits and Virtual Care

Mental Health as a Priority

Mental health has become a critical component of employee benefits packages. Employers are expanding their mental health provider networks and investing in digital solutions that help manage overall well-being. These investments are crucial in erasing the stigma around discussing mental health in the workplace and supporting employees' overall health.

Leveraging Virtual Health Solutions

The shift towards virtual health solutions continues as employers aim to provide accessible, cost-effective care. Implementing virtual care and AI-driven platforms helps employees navigate their health benefits more efficiently, ensuring they receive the best possible care at the lowest cost. Virtual health platforms offer a range of services from routine consultations to mental health support, making healthcare accessible even from remote locations.

Calls to Action: Partnering and Investing in Health

Partner with Expert Providers

Large employers are encouraged to partner with experienced providers like The CBC Health Insurance Marketplace for Costco Members. Such partnerships can bring expert insights into navigating the complexities of healthcare management, ensuring both cost efficiency and high-quality care.

Invest in Comprehensive Employee Wellness Programs

Investing in comprehensive wellness programs that include mental, physical, and financial health components can significantly impact reducing long-term healthcare costs. These programs should focus on preventive care and encourage active employee engagement in health and wellness activities.

Continuous Education and Adaptation

Staying informed about the latest trends in healthcare management and regulatory changes is crucial. Continuous education and strategic adaptation can empower employers to make informed decisions that align with both financial and employee well-being goals.

In conclusion, managing healthcare costs in today's environment requires a multifaceted approach characterized by strategic partnerships, innovative health management strategies, and a commitment to employee wellness. For large employers, the journey towards effective healthcare cost management is complex but navigable with the right partners and strategies.

The CBC Health Insurance Marketplace for Costco Members has been instrumental in helping large employers ensure that their health benefits strategy is not only cost-effective but also supportive of their most valuable asset—their employees.

Brought to you by the insurance professionals at Custom Benefit Consultants, Inc.

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Employees, Organizational Mission, hybrid work models, remote work models, Connecting with Employees