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Employers expect their health care costs to increase 9% next year, which – if the forecasts planned – would represent the highest annual increase of more than a decade, according to a new business group survey.
Pharmacy expenditure on display feeds a large part of cost growth, as well as the incidences increasing chronic and complex conditions such as cancer. Employers expect to reduce the increase in costs to 7.6% thanks to plan design changes.
But “the story of this year is perhaps more intimidating and sober than it has ever been,” said Ellen Kelsay, president and chief executive officer of the BGH, during a Tuesday call with press.
Employers have already started 2025 in disadvantage after having had a high increase in costs in 2023 and 2024. These two years experienced consecutive consecutive increases in health spending beyond what employers expected a decade, according to the BGH.
Employers who underestimate health care costs in the past two years are a bad sign – especially since the increases planned for 2025 and 2026 are already quite high, at 8% and 9%, Kelsay said.
The actual trend of health care increased more strongly than employers were expected in 2023 and 2024
Projected vs real trend of health care, 2017-2026
For the report, the BGH Questioned 121 major employers in a range of industries which jointly cover 11.6 million people worldwide, including 7.4 million
The group noted that the pharmacy is a major engine of overall health care costs, representing 24% of all employers’ health expenses in 2024. This is up compared to 21% three years earlier.
And employers expect an increase of 11% to 12% of pharmacy costs in 2026, according to the BGH.
“The concerns about the trend of the pharmacy are not new, but they have worsened,” said Kelsay.
Drugs against expensive obesity called GLP-1 contribute significantly to pharmacy expenses in snowball.
Medicines, including Wegovy, Zepbound and Mounjaro, are clinically effective but are delivered with a high price of hundreds of dollars, or even more than $ 1,000 per month. The cost has left the employers struggling to find out if they should cover the drugs, although more make them available in the middle of the demanded demand: around 30 million Americans, or about 9% of the American population, could be on GLP-1 by 2030, according to an analysis of the JP Morgan investment bank.
About 79% of employers have increased in the use of GLP-1, while an additional 15% expect to see an increase in the future as the clinical indications of GLP-1 extend to cover a greater variety of conditions, including diabetes, weight loss, sleep apnea, cardiovascular conditions and even more, BGH found it.
More than half of employers say that GLP-1 and other high cost therapies stimulate cost growth to a “very large” or “large” extended
Extent of the employer to which different factors stimulate the costs of health care
Employers also report high cancer expenses. The disease was the main cost management condition for the fourth consecutive year in 2025, due to the growing prevalence of cancer diagnostics and the rise in treatment costs, according to the BGH.
Cancer was followed by musculoskeletal and cardiovascular conditions, respectively.
Accelerating expenses on conditions – and the costly therapies that deal with them – is an indication that American workforce becomes more sick. It is a worrying tendency that experts attribute to the break in preventive care and screening during the COVID-19 pandemic, which led doctors to lack signs of early alert of certain serious health needs, as well as to the general aging of the American population.
Employers have tried to absorb the majority of cost increases in recent years. But it is an increasingly unbearable solution, according to experts in social benefits.
Half of large employers have said that they are likely or very likely to transfer more costs to employees next year, whether by increasing bonuses, deductibles or unconditional maximums, according to a survey in July to Mercer.
In the BGH Survey, 12% of employers said they would immediately increase employee contributions if they were in a hurry to reduce cost growth, while 38% additional said they would consider it strongly and 37% said they would consider this decision slightly. Only 13% of employers said they would consider him a last resort.
Likewise, only one employer said they would consider increasing the pocket fees of employees as a last resort. The three -quarters said they would consider the move more seriously or implemented it immediately if necessary.
Higher plan costs would have been major Financial implications for more than 160 million Americans who receive insurance thanks to their work. These costs for many employees are already high, which leads many Americans, including those who have insurance, to delay or give up care.
And the Americans are already tightening their portfolios in the middle of sticky inflation and, as President Donald Trump’s prices should increase the price of goods.
But employers may have no other option, according to Kelsay.
“For many years, employers have done their best to prevent employees from transmitting one of these premium increases. I think we are entering an environment where employees can see some of these increases arise, “said Kelsay.
However, employers plan to act more aggressively to limit costs on the side of suppliers, in particular the renegotiation of contracts with their plan partners or the search for new suppliers to obtain lower prices, according to the BGH. They also provide for Nix programs that their members do not use.
“Successful cost increases is a dressing approach. It does not correct long -term health care costs,” Kelsay said. “EEmployers will have to draw as much levers as possible on the supplier side to meet the overall costs of the plan and certainly within the affordability for employees. »»
Many employers have also declared that they would limit or reduce the coverage of GLP-1 to contain costs, or adopt transparent pharmacy services, in which medication intermediaries receive stable administrative costs for their services. (However, the respondents recognized the difficult In a way that encourages them to prioritize drugs at high cost in the lists of covered drugs, which can contribute to higher medication expenses.)
More than 4 out of 10 employers modify either PBM or a proposal request, noted the BGH.
This is the latest survey that finds employers unhappy with the status quo of pharmacy benefits. As well as concerns about flaps, Pbm have also been criticized for hidden costs, black self-background and complex box contracts that health insurers and employers say they leave them in darkness.
“Traditional paradigms are simply not durable,” said Kelsay.
Employers are also preparing in the middle of the “dizzying rhythm” of Washington’s police changes, which – whether focused on commercial insurance or not – will always affect the costs, Kelsay said.
For example, the massive bill for the GOP tax and policies adopted in July includes Raide reductions in Medicaid and an overhaul of the affordable care law which should make some 10 million Americans lose and lead to a drop in the reimbursement of providers. As such, hospitals and doctors will likely try to compensate for these losses by increasing the prices of the commercial insured, said the CEO of BGH.
“Any modification to the programs sponsored by the government will most certainly have an impact downstream” in the coming years, said Kelsay.
