Cancer is Number-one Driver of Employer Health Care Cost Increases

Health care costs for large employers spiked sharply in 2021 after remaining flat in 2020 due to nonemergency care being delayed during the COVID-19 pandemic, a new survey shows.

In addition, cancer has overtaken musculoskeletal conditions as the top driver of large companies’ health care costs, according to the nonprofit Business Group on Health’s (BGH’s) 2023 Large Employers’ Health Care Strategy and Plan Design Survey report, released on Aug. 23. A total of 135 large employers across varied sectors, that together cover more than 18 million people in the U.S., completed the survey between May 31, 2022, and July 13, 2022.

Thtop three conditions fueling health care costs remained the same this year as in 2021: cardiovascular disease, cancer, and musculoskeletal conditions. However, likely due to pandemic-related delays in care, 13% of employers said they have seen more late-stage cancers and another 44% anticipate seeing such an increase in the future.

Despite rising prices, employers expect to cover 82% of the cost of employee coverage in 2022, up from 80% the year before (employer support for family coverage remains at 80% of premiums).

Employers have been reluctant to shift costs to employees in the short term and are looking at fundamental reforms to care delivery systems, such as advanced primary care and centers of excellence for specific health conditions, to address health care expenses and prescription drug costs.

Employers “are deeply concerned about unsustainable health care costs, the devastating effects of the pandemic on employee health, and the need to work creatively with their partners toward a more positive and sustainable health care experience, among other issues,” said Ellen Kelsay, President and CEO of Business Group on Health.

Pharmacy costs are 21% of overall health care spending, and specialty medications account for 56% of all pharmacy spending, survey respondents said.

Large employers overwhelmingly (99%) said they were concerned about prescription drug cost increases. Last year, prescription drugs accounted for a median of 21% of employers’ health care costs, with more than half of pharmacy spend going to specialty medications.

Employers have opportunities to bring down costs through pharmacy program tactics, including biosimilar coverage, site-of-care and case management, among others.

Requiring patients to receive prior authorization from their health plan for coverage of high-cost specialty medications, under both pharmacy and medical benefit plans, continues to be the most common way employers manage the cost of specialty mediations, the BGH survey showed.

Reprinted from the Society of Human Resources Management

Written by Stephen Miller, CEBS