How Employers Are Adapting to Healthcare Costs

🔍 A lightbulb moment that's transforming C-suites across America: Employers discovering that optimizing their health benefits strategy delivered the same bottom-line impact as a 30% increase in top-line revenue. In a slow-growth industry, that's game-changing. In inflationary times, it can save jobs and the bottom-line. Here's the wake-up call from CFO Magazine: Most companies spend more on healthcare than their core materials (think Starbucks → healthcare > coffee beans). Yet they manage other major expenses down to 0.01% while accepting 5-20% annual healthcare cost increases. The shift that's creating competitive advantage? - Treating healthcare as a strategic business unit, not an HR expense - Hiring healthcare administrators with financial + supply chain expertise - Demanding transparency in pricing and outcomes - Investing in prevention and primary care The results? Companies have achieved: • 40-55% lower per-capita health costs across a wide array of industries & size of orgs • Improved workforce performance • Enhanced recruitment/retention • Stronger bottom line The best part? These advantages compound over time, widening the gap between forward-thinking companies and those stuck in the status quo. What's your experience? Has your organization treated healthcare spending as a strategic opportunity or a necessary evil? #HealthcareSolutions #CFOStrategy #BusinessTransformation Jeffrey Hogan Chris Deacon Patrick Moore

The man once ranked a top health benefits consultant in the world, who charged Fortune 100 companies hundreds of thousands of dollars for this advice, is now giving it away free. His name is Lee Lewis. At the Health Transformation Alliance, he works with 85+ jumbo employers covering 6 million lives. In a recent conversation with the Health Care Administrators Association® (HCAA), he handed employers a three-part framework that costs nothing to implement except the willingness to act. He calls it ABC. A — Advanced Primary Care The front door of your health plan is broken. The fix: Direct Primary Care arrangements, value-based agreements — doctors paid to keep your employees healthy, not to generate volume. You cannot fix downstream costs if the front door is broken. B — Behavioral Health 1 in 4 employees has an untreated behavioral health need. You're already paying for it — in ER visits, absenteeism, and turnover. You're just not seeing it line-itemed on your claims report. Real access. Not buried under prior auth. Not routed to a voicemail. Accessible — and the most differentiated benefit in a talent market where everyone else is still offering the same stale PPO. C — Centers of Excellence Here's Lee's sharpest analogy: You'd form a committee for months if you were buying 100 trucks at $75K each. But employers routinely purchase 100 back surgeries at the same average cost — with no idea where to go, what a good price is, or what quality looks like. His explanation for why hospitals haven't fixed this: the customers aren't asking. COE partners do the same procedures for a fraction of what your hospitals bill. Waive the employee's cost-share for using the COE and cover travel. Zero cost to the employee. Dramatic savings to the plan. Better outcomes. Smaller employers can start with a simple fee schedule agreement with a local ambulatory surgical center at ~150% Medicare — no complex infrastructure required. A, B, C. Lee built his career advising the largest employers in the world. Now he's sharing this openly, NDA-free, because he believes the industry's problems only get solved when more people act on the answers. The advice is free. The cost of inertia is not — it compounds every single day you stay on the status quo. 📌 Tag a self-funded employer or benefits advisor who needs to see this. The ABCs don't require a consultant to start. They require a decision to start running your health plan like a strategic business it is. Julie Wasserman Emma Fox, CHVA Chris Mathew Julie Staub Timothy Tolino Lori Smith Guliano

New PBGH data sends a clear message from America’s largest employers: the healthcare affordability crisis is accelerating and the status quo isn’t working. According to the Purchaser Business Group on Health (PBGH), jumbo employers cite affordability as their top healthcare challenge, followed closely by data analytics & transparency and growing interest in advanced primary care. These findings reflect feedback from more than two dozen of the nation’s largest employers and the urgency is unmistakable. As PBGH President & CEO Elizabeth Mitchell notes, employers are taking a far more proactive stance because escalating costs, opaque pricing, and misaligned incentives are not being addressed by the industry. Employers simply can’t keep writing blank checks in a system where prices rise faster than value, outcomes don’t improve, and accountability is elusive. What’s driving this shift? 🟢 Runaway cost increases that hit both the employer’s bottom line and employees’ paychecks. 🟢 Heightened fiduciary responsibilities, requiring employers to better understand what they’re spending and what they’re getting in return. 🟢 Persistent lack of data access and transparency, especially in pharmacy and PBM relationships. It’s no surprise employers are increasingly open to new PBM and TPA models, seeking partners that deliver clarity, value, and alignment. Mental and behavioral health, metabolic conditions, cancer, weight management, and high‑cost claims continue to be major cost drivers often more due to rising prices than changes in population health. With recent federal PBM reforms and regulatory scrutiny, momentum is building. Employers are engaging regulators, challenging consolidation, and pushing for real transparency and accountability because fiduciary duty demands it. Bottom line: Employers are done being passive purchasers. Transparency, data, and value are no longer “nice to have” they are mission‑critical. #HealthcareAffordability #EmployerSponsoredHealth #Transparency #FiduciaryDuty #PBMReform #AdvancedPrimaryCare #HealthPolicy #ValueBasedCare

🔍 𝗔𝘁 𝘁𝗵𝗲 𝗽𝘂𝘀𝗵 𝗼𝗳 𝗮 𝗯𝘂𝘁𝘁𝗼𝗻: 𝗪𝗵𝗲𝗻 𝗵𝗲𝗮𝗹𝘁𝗵 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗽𝗿𝗲𝗺𝗶𝘂𝗺𝘀 𝗯𝗲𝗰𝗼𝗺𝗲 𝘁𝗵𝗲 𝘀𝗶𝗹𝗲𝗻𝘁 𝗰𝗼𝘀𝘁 𝗲𝘅𝗽𝗹𝗼𝘀𝗶𝗼𝗻. Across the international companies I work with, one thing is the same everywhere: premiums rise. Year after year. But too often there is no reaction, no strategy, no shared discussion. And that affects everyone – the business 𝗮𝗻𝗱 the employees and their families. 📈 𝗔 𝗳𝗲𝘄 𝗶𝗻𝗱𝗶𝗰𝗮𝘁𝗶𝘃𝗲 𝗿𝗲𝗮𝗹𝗶𝘁𝗶𝗲𝘀: Many multinational organizations are facing double-digit medical and insurance premium increases each year. At the same time, employee expectations are rising: not just 𝘴𝘦𝘤𝘶𝘳𝘪𝘵𝘺, but 𝘨𝘦𝘯𝘶𝘪𝘯𝘦 𝘤𝘢𝘳𝘦. The concept of 𝗗𝘂𝘁𝘆 𝗼𝗳 𝗖𝗮𝗿𝗲 is increasingly seen not as a legal checkbox, but as a strategic advantage in talent retention and employer branding. 💡 𝗪𝗵𝗮𝘁 𝗰𝗮𝗻 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝗱𝗼? 1️⃣ 𝗠𝗮𝗸𝗲 𝘁𝗵𝗲 𝗱𝗮𝘁𝗮 𝘃𝗶𝘀𝗶𝗯𝗹𝗲 Create a dashboard that shows how health insurance and medical plan costs have developed across your global population in recent years. When the numbers become clear, action becomes unavoidable. 2️⃣ 𝗦𝘁𝗼𝗽 𝘁𝗵𝗲 “𝘀𝗽𝗿𝗶𝗻𝗸𝗹𝗲𝗿-𝘀𝘆𝘀𝘁𝗲𝗺 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀” 𝗮𝗽𝗽𝗿𝗼𝗮𝗰𝗵 The rising costs shouldn’t be the excuse to cut benefits - they should be the reason to design them smarter. The key question becomes: 🗣 𝘏𝘰𝘸 𝘥𝘰 𝘸𝘦 𝘢𝘭𝘭𝘰𝘤𝘢𝘵𝘦 𝘵𝘩𝘦𝘴𝘦 𝘳𝘪𝘴𝘪𝘯𝘨 𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘪𝘰𝘯𝘴 𝘪𝘯 𝘢 𝘸𝘢𝘺 𝘵𝘩𝘢𝘵 𝘨𝘦𝘯𝘶𝘪𝘯𝘦𝘭𝘺 𝘣𝘦𝘯𝘦𝘧𝘪𝘵𝘴 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘦𝘴 𝘢𝘯𝘥 𝘵𝘩𝘦𝘪𝘳 𝘧𝘢𝘮𝘪𝘭𝘪𝘦𝘴? 3️⃣ 𝗧𝗿𝗲𝗮𝘁 𝗰𝗮𝗿𝗲 𝗮𝘀 𝗮 𝗹𝗲𝗮𝗱𝗲𝗿𝘀𝗵𝗶𝗽 𝗺𝗶𝗻𝗱𝘀𝗲𝘁 Insurance isn’t just compliance. It’s a signal of belonging: 👉 “𝘐 𝘴𝘦𝘦 𝘺𝘰𝘶.” 👉 “𝘐’𝘷𝘦 𝘨𝘰𝘵 𝘺𝘰𝘶 - 𝘦𝘷𝘦𝘯 𝘸𝘩𝘦𝘯 𝘭𝘪𝘧𝘦 𝘨𝘦𝘵𝘴 𝘤𝘰𝘮𝘱𝘭𝘪𝘤𝘢𝘵𝘦𝘥.” Benefits should make sure employees don’t have to navigate uncertainty alone. 🌱 When premiums rise, the burden on employees shouldn’t rise with them. 𝗪𝗵𝗮𝘁 𝘀𝗵𝗼𝘂𝗹𝗱 𝗿𝗶𝘀𝗲 𝗶𝘀 𝘁𝗵𝗲 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗿’𝘀 𝗿𝗼𝗹𝗲 - 𝗶𝗻 𝗰𝗼𝗺𝗺𝗶𝘁𝗺𝗲𝗻𝘁, 𝗶𝗻 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗼𝗻, 𝗮𝗻𝗱 𝗶𝗻 𝘁𝗿𝘂𝘀𝘁. Because cost increases alone don’t create value. 𝗖𝗮𝗿𝗲 𝗱𝗼𝗲𝘀. 👉 𝗤𝘂𝗲𝘀𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝘆𝗼𝘂: How well do you track the increase in health program costs - and what are you doing to ensure your workforce doesn’t become the one paying the price? #employeebenefits #health #healthcost #globalbenefits #culture #dutyofcare

"Empathy without strategy is just expensive. Empathy WITH a strategy is a competitive advantage." This is the message I was really passionate about sharing at DisruptHR a few weeks ago, where I spoke on how GLP-1s are blowing up benefits budgets for employers around the country. These drugs are absolutely a miracle for millions. They are also the number one cost driver on health plans; yes, even bigger than cancer. With 67% of employees willing to stay in a job they hate just to maintain GLP-1 coverage, this is no longer just a benefits issue. It's a workforce strategy challenge. Leaders are facing with two bad options: - Option 1: cover nothing, and watch your best talent walk out the door to a competitor who does. - Option 2: Cover everything and watch your budget explode. There is, however, a third path: building a sustainable, scalable strategy. This means moving from a simple "yes/no" to a "responsible yes". As I laid out in my talk, that means covering only for medical needs (diabetes, obesity with comorbidities), not cosmetic needs. And be wary of the headlines promising “GLP-1s for $149/month.” That price applies only to uninsured, cash-pay patients, and does not apply for every fill. Once prescriptions go through a traditional PBM, costs often exceed $1,000 to $1,400 per month. Without transparency, employers rarely see where the dollars go. This is why modern, transparent PBM partnerships are essential. They empower employers to: - Audit claims and identify usage patterns (if you're PBM won't give you this data, you have the wrong partner; find one who will) - Renegotiate PBM contracts to remove hidden markups and drive to the lowest net cost - Educate leadership on cost and clinical appropriateness - Lead the narrative with both empathy and fiscal discipline At this point, this isn't just an HR issue. It's a business one. This is how you turn empathy into a true competitive advantage. #BenefitsStrategy #TransparentPBM #EmployerHealthPlans #GLP1 #CostContainment #WorkforceStrategy #HealthcareLeadership

If you are serious about healthcare affordability, you need to recognize where most Americans actually get their insurance: More than 165 million people get coverage through their employer, and employers spend nearly $1 trillion annually to provide it. For three consecutive years, employers’ premiums have risen >6%, the first time that's happened in two decades. Early signs point to an even steeper climb in 2026. The cost curve continues to bend in the wrong direction. Employers absorb these annual increases and share the pain with their workers through lower wages, higher premiums, deductibles, and out-of-pocket costs. Yet, most employers have no way of knowing whether the prices they pay are competitive with other plans in the market. Whether the providers they cover are delivering high-quality care. And whether their vendors are effectively negotiating on their behalf. Last year, the Peterson Center on Healthcare funded a data demonstration project in which the Purchaser Business Group on Health (PBGH) worked with five major employers to combine price transparency data, employer claims data, and independent quality and safety ratings. The results were shocking. They found major price variations across providers and saw inflated rates in their networks. They identified markets in which popular, high-cost providers had the lowest quality and safety ratings. Every employer was able to identify savings opportunities. At Peterson Health Technology Institute (PHTI), we've seen what happens when employers have clear, independent evidence to guide their purchasing decisions: they make smarter decisions. Vendors respond. The market starts delivering better outcomes at lower costs. For years, employers have been asking for that same rigorous analysis to inform their medical benefit purchasing, which drives the bulk of spending.   That’s why I am so excited to share that Peterson Philanthropies has committed $50 million to launch Peterson Health Analytics (PHA), giving employers independent, actionable data they need to take greater control of their healthcare spending and purchase more affordable, higher quality care for millions of employees and their families. PHA’s work is a practical step toward improving affordability in U.S. healthcare. Creating change in employer benefits is hard. I am thrilled that the fearless Cora Opsahl will lead PHA and show all employers that better healthcare at lower costs is possible.   Peterson Health Analytics has been built with employers, for employers—without financial ties to health plans, health systems, or benefits consultants. That independence is exactly what employers have been missing. PHA is proud to partner with leading benefit coalitions PBGH and National Alliance of Healthcare Purchaser Coalitions. When employers have the right data, they can bend the cost curve and deliver better healthcare for all. Learn more at petersonanalytics.com

Rising health premiums. Less care. Worse outcomes. My guess is most of you are facing this right now. Here’s one approach that’s actually worked for us. A few years ago, Fireclay Tile hit a breaking point. Every renewal felt like a bad joke — higher premiums, fewer answers, and no real health outcomes to show for it. We realized health insurance companies weren’t going to make our people healthier. So we decided to take control. We built a new kind of wellness model — designed for real life, not fine print. We cut the premiums we offered our team in half. BUT, we then created a program where teammates could pay less than they were before by taking simple, proactive steps toward better health. This included: ✅ Annual Biometric screenings ✅ Annual Preventative care visits ✅ No Smoking Attestation ✅ Annual One-on-one “Benefits 1:1” sessions (Thank you Gaby Villanueva and Arianna Seyedjafari) And the results? In two years... - Biometric screenings ↑ 80% - Preventative care visits ↑ 78% - 90%+ Teammates completed “Benefits 1:1” sessions When people understand their benefits and feel ownership, they make better health decisions and should see improvement over the long term. But let’s zoom out. A recent New York Times article reports that employers are facing the sharpest increase in medical costs in 15 years — nearly 9% higher next year. https://lnkd.in/gbVgFue3 For Fireclay, this will be the fifth straight year of big hikes. And from what we are hearing, the numbers are shocking. And...we're not alone. All for what? Worse care? Worse outcomes? Let's face it. The system is broken. It's not designed to care. It’s designed to bill. If the health insurance system won’t make our people healthier, what will? For us, it’s trust, transparency, and aligned incentives. I do not know where it all goes from here, but what we do know is that we have to be proactive to support our team. 🧱 Healthier people. Healthier company. Stronger community.

#When_Private_Healthcare_Is_Desperate_for_Change! The Emergence of Integrated Healthcare: Can Providers Enter the Insurance Market? A significant trend is emerging in the healthcare sector: insurance companies are expanding into direct healthcare provision. In the Saudi market, for instance, industry giants Tawuniya and Bupa have established and are rapidly growing their own subsidiary healthcare companies. Regulators have mandated that these ventures focus primarily on primary care and population health management. This strategy of "vertical integration" is seen as a key method for mitigating the risks of relentless medical inflation. This development prompts a critical question: Could healthcare providers similarly enter the insurance market? The answer is a resounding yes. Major hospital chains are exceptionally well-positioned to make this move. Their current expansion into building and operating Primary Healthcare Centers (PHCs), home care services, and digital health platforms—bolstered by their strong nationwide presence—effectively allows them to operate as Accountable Care Organizations (ACOs). These ACO-like entities could contract directly with large employers, such as ARAMCO and SABIC. They could utilize models like Risk-Adjusted Capitation or Administrative Services Only (ASO) agreements, facilitated through Third-Party Administrators (TPAs). This direct-contracting model offers significant advantages for employers: · Enhanced Transparency and Control: It provides greater visibility and command over healthcare expenditures. · Reduced Financial Outlay: It eliminates large upfront premium payments to traditional insurers. · Potential for Savings: It can generate considerable savings by bypassing the administrative overhead typically charged by insurance companies. In essence, if traditional insurers fail to proactively manage rising costs, large employers have a compelling business case to circumvent them entirely. What is the necessary next step? The strategy requires an aggressive shift by payors toward integrated care models. This necessitates the vigorous implementation of Population Health Management (PHM) and Value-Based Healthcare (VBHC) principles. The industry is already transforming. The prevailing, outdated healthcare model is widely regarded as unsustainable, and employers can no longer bear the burden of perpetual cost inflation. What is urgently needed is a better alignment of incentives among all stakeholders: the funder (the employer), the insurer, the provider, the physician, and the patient. #ارطبون_التغيير

Employers are REALLY taking an activist role to drive healthcare innovation. Medical cost trend has hit a boiling point, with 9–10% annual increases projected through 2026 (some segments even higher!). Self-funded employers pay for around 2 in 3 commercial dollars, and they simply can’t afford to sit back anymore. In talking with many self-funded employers, many aren't just accepting benefit designs handed to them by their carriers. They are truly pushing for innovation. This has caused the scope of their role to increase significantly, as shown by this image from McKinsey (link in comments). Everyday I hear more about variable copay plans, alternative payment models (shout out to our partners at Aligned Marketplace), and radically different mechanisms to manage ballooning pharmacy costs. And importantly: employers are demanding proof. Many employers raced to adopt programs during COVID and are now paring back those programs that haven't proven a clear ROI. This is reshaping the benefits landscape. Health plans and vendors who can deliver validated outcomes and hard cost savings will thrive. Those who can’t will get squeezed out. Most folks don't realize it, but employers have always been the hidden force in U.S. healthcare. Given the current trend, they are REALLY out front, forcing their partners to do more. And that’s a good thing. #employeebenefits #healthcare #healthtech #digitalhealth

Pharmacy spending now makes up 27% of commercial healthcare costs. What are employers planning to do about it? --- Last month, Business Group on Health released their 2025 healthcare strategy survey results (in the comments). In it, they show that the median employer is spending 27% of #HealthcareCosts on #pharmacy. That's compared to 21% only two years before (see attached graphic). --- -93% of employers are "concerned" or “very concerned” about #DrugCosts -86% are concerned/very concerned about the lack of transparency in pharmacy contracting and rebates -84% are concerned/very concerned about the opaqueness of the pharmacy supply chain Pharmacy spending is largely responsible for the recent increases in overall healthcare costs above expected trends. The top cost driver? #GLP1s 67% of employers are now covering GLP-1s for obesity, compared to less than half last year 87% rely on prior authorization requirements to manage obesity GLP-1s. 52% require patients to participate in a weight management program 51% have patient eligibility requirements like BMI or comorbidities --- What are the employers going to do about pharmacy costs? Here are the top strategies being considered: -Leverage an RFP process (even if you don't change vendors, you'll often get better pricing from the current vendor) -Limit/reduce coverage for GLP-1s (even more than now) -Replace under-performing vendors -Eliminate programs with low utilization (watch out point solutions) -Adopt a transparent PBM model -Implement a high-performance network/center of excellence model --- It's impossible to know how you're doing until you get your pharmacy data and (ideally) visualize it to see how things are changing over time. -What are the top drugs and drug classes? -Who are the top prescribers, pharmacies, and employees? -How do pricing, rebates, and discounts compare to benchmarks? Then take that information and use it in the top strategies listed above. How else would you know what you need and if your strategy worked?