State of the Insurance Market Report
2025 Initial Outlook and 2024 Wrap-Up
Employee Benefits
Constant change is the norm for employee benefits, and it is influenced by many factors from economic conditions to medical and digital innovation to multi-jurisdictional regulations, among others. In our initial outlook for 2024, we saw changing workforce and hiring dynamics, increased impacts from turnover, and the fast pace of pharmacy innovation trends. We anticipated increased medical utilization, inflationary pressure, and changes in admitting and billing patterns to play a significant role in raising costs for employers.
Coverage Considerations
- Pharmacy trends: Significant consideration needs to be given to current and expected pharmacy trends. Key areas for employers to focus on over the next year include GLP-1 drugs (for diabetes and obesity), specialty pharmacy including biosimilars and cell and gene therapy (ultra-high-cost drugs), and fiduciary responsibility.
- GLP-1 drugs: GLP-1s will continue to be a major driving factor given the drug class has a significant pipeline with alternate formulations (oral) and multiple additional indications being studied.
- Biosimilars: This area continues to offer opportunities for employers, with several Pharmacy Benefit Managers (PBM) announcing their Humira biosimilar strategies through 2025. As more biologics become available as biosimilars, employers may have the potential to offer additional cost-effective treatments in higher-cost drug categories by using competitively priced alternatives.
- Cell & Gene Therapies: Ongoing approvals can be expected with numerous therapies now Food and Drug Administration (FDA) approved, including the costliest therapy priced at $4.25M. Value-based arrangements are expected to be the core of the solution, complemented by stop loss insurance, clinical management, provider network management, and outcomes tracking to form a comprehensive solution.
Employee Benefits Rate Forecast |
||
| Medical: |  |
+7% to +11%* *Trend will vary regionally based on the healthcare delivery system and funding mechanism |
| Prescription Drugs, Retail: | |
+9% to +10.5% |
| Prescription Drugs, Specialty: | |
+14% to +16.5% |
| Stop Loss Premium, Leveraged Trend: | |
+16% to +19% |
Anticipate scrutiny on benefits management:
Employers (particularly large employers) should anticipate scrutiny on benefit management oversight given the Federal Trade Commission (FTC) is investigating PBM practices. Employers should work with their PBM to ensure contractual language provides transparency and includes appropriate audit allowances. Additionally, employers should be aware of employee benefits-related legislation and rulings. Multi-state employers are advised to pay extra attention to litigation trends as agency regulations may be vacated in certain jurisdictions but affirmed in others.
Analyze opportunities to manage spend:
Employers are advised to look at all available possibilities to manage spend including evaluating your current health plan financing model against alternative funding methods. Ultimately it comes down to an employer’s tolerance for risk and ability to effectively administer programs that help achieve their benefits strategy. Keep in mind, the smaller the organization, the higher the impact of cost volatility with fewer options to mitigate future increases.
Keep a close eye on pharmacy and evaluate it regularly:
Given the rapid pace of innovation in pharmacy, employers should plan for a strategy that balances pharmacy cost while ensuring sustainable coverage and outcomes. For example, some larger self-funded employers are beginning to require contracts that allow for annual market checks to help keep costs competitive; however, this may not be an option for all employers.
From your total rewards program to your leadership development strategy, it’s time to think beyond traditional benefits and find solutions that make both your employees and business thrive.
Download the Report
Our industry and product line specialists have collaborated to provide an update on current trends and market conditions. We invite you to explore their insights by downloading our latest State of the Insurance Market Report.