It’s no secret that employers are struggling with health care costs. A new survey by Willis Towers Watson shows that more than half of employers have an average budget of more than 4.5 percentage points in 2024.
The survey was released on Monday and received responses from 417 employers and has more than 100 employees. About 81% of people are self-sufficient and 19% have insurance.
It found that employers also don't want any relief any time soon. They expect their health care costs to increase by 9.1% in 2026 (before the change of plans) compared to 8.1% in 2025 and 7% in 2024. After making the plan changes, these figures are 8%, 7%, and 6%, respectively. The highest drivers of these costs are pharmacy costs (particularly specialty drugs and GLP-1), high-cost claimants and chronic diseases.
When asked how they plan to manage costs over the next three years, 59% of employers said they were seeking to implement “wider cost actions”, with 47% of employers shifting their costs to their employees, and 32% absorbing them. When looking at the past three years, the proportion of employers adopting these strategies was 46%, 44%, and 50%, respectively.
“Because it becomes too expensive, because it becomes too expensive. They also avoid positive cost transfers because it affects employee health, satisfaction and retention. Instead, employers are seeking bold and disruptive changes to control costs and improve health, creating a more sustainable path forward,” said Tim Stawicki, chief spirit of health and welfare.
Employers also plan to make suppliers more responsible, with 46% of companies evaluating supplier performance. Additionally, 36% are bidding for health plans, and another 50% are planning or considering doing so.
About 41% of businesses also adopt alternative planning designs, while 46% plan or consider doing so in the future. These include using networks that restrict access to certain providers, providing more transparency, and providing more care navigation.
Additionally, employers are increasingly dissatisfied with their pharmacy welfare managers: 75% own or bid on their PBM. About 49% use transparent contract structures and 58% review their pharmacy benefits.
In terms of managing GLP-1 costs, employers’ strategies include the need to participate in a lifestyle management program, implementing 30-day fill restrictions and higher cost sharing.
Furthermore, employers are increasingly interested in leveraging AI. About 80% say they think AI will “fundamentally change health care benefits for the next three years.” Employers see the greatest potential of AI in the healthcare sector by enhancing navigation, personalizing decisions, improving employee experience, simplifying welfare communication and evaluating healthcare providers.
“Employers must take a more revolutionary approach to addressing direct cost pressures and long-term cost trends, especially because healthcare costs appear firmly on the upward trajectory. At the same time, employers seek innovations in clinical programs, technology and AI to effectively use in healthcare to address the burden of chronic diseases and help people protect their health,” said the Court Enterprise Enterprise Director, Enterprise Enterprise, said. ”
Photo: Santima.studio, Getty Images
