News Spotlight

College counselors are the latest employee benefit. Free college coaching is the latest in a growing list of benefits to which companies have been resorting in efforts to bolster worker satisfaction (USA Today).

Employers shift from salaries to bonus-based pay. More American workers are seeing their compensation tied to performance metrics, a shift from traditional fixed salaries (Wall Street Journal).

Employees want companies to prioritize upskilling. While employees see the benefit of AI and automation, they expect companies to invest in their skills development (Fast Company).

Stat of the Week

A new report finds that between 1979 and 2023, the share of college-educated, working-age men with a job declined to 93% from 96%

This trend suggests a shifting landscape in the job market, where even higher education no longer guarantees employment security. It may reflect changes in the economy, such as automation, globalization, or evolving skill requirements that are outpacing traditional education. This shift could lead to increased competition for available positions, potentially driving down wages or encouraging over-qualification for certain roles. It might also contribute to a sense of job insecurity among highly educated workers, impacting workplace morale and productivity. Furthermore, this trend could influence hiring practices, with employers possibly placing more emphasis on specialized skills or experience over general educational attainment.

Deep Dive Article

How to Uncover and Manage Your Healthcare Costs

For this week’s Workplace Intelligence Newsletter, I interviewed Dr. Sunil Budhrani, Chief Innovation and Medical Officer, and Josh Golden, Senior Vice President of Strategy, at Capital Rx, a healthcare technology company advancing our nation’s electronic healthcare infrastructure to improve drug price visibility and patient outcomes. In their roles, Sunil and Josh are responsible for assessing market trends, evaluating business initiatives, and developing strategic partnerships and innovative solutions to improve how health benefit programs are administered.

During our conversation, we discussed employers’ largest healthcare costs, which areas of healthcare are often overlooked, and top priorities. We also explored some key challenges to providing a better employee wellness benefits package, and they offered some ways to control or even lower healthcare costs.

Read on for his insights about these important topics, and be sure to join us for our live event on October 9th at 2:30 PM EST, where we’ll continue this timely discussion.

What are the biggest healthcare costs right now that are impacting employers?

Healthcare costs overall are increasing at an unsustainable rate for employer plan sponsors, and the primary driver of increasing costs is the employer’s pharmacy benefit.

Overall, healthcare costs have increased more than 50% since 2017, and rising pharmacy costs, which now account for about 27% of overall spending, are to blame. Moreover, within vertically integrated vendors that manage both medical and pharmacy benefits, the pharmacy component represents well over 50% of enterprise profitability, so from a profit standpoint, pharmacy really is the tail that wags the dog for a large national carrier.

Within the pharmacy benefit, specialty medicines (which are typically delivered via injection, require special handling, treat rare or orphan diseases, and are more expensive) have risen to an astonishing 54% of overall spending, up from 49% in 2018.

More recently, the skyrocketing use of glucagon-like peptide-1s (GLP-1s), including Ozempic and Wegovy, for diabetes, obesity, and other conditions is a major inflationary factor and massive financial concern for employers.

Other factors contribute to employers’ expectations for 7%—8% annual cost increases, including the high costs of treating musculoskeletal conditions (hip and knee replacements, for example), cancers, cardiovascular disease, and newborn/infant care, which are among the top triggers of stop loss reimbursement annually.

Which areas of healthcare do employers typically overlook?

“The issue isn’t necessarily that employer plan sponsors overlook areas of healthcare,” says Josh. “It’s that they have historically relied on vendors that profit from higher prices, whether it be pharmacy benefits managers (PBMs) profiting from the dispensing of high-cost medication or a health plan and provider profiting from surgical procedures.” These misaligned vendors have not only reaped immense profits at the expense of health plans and patients for years - they have also made accessing plan data difficult. This is because their profit models thrive on opacity. So, it has been extremely challenging for plan sponsors to uncover and manage the specific sources of inflation or waste.

The misaligned profit models can drive vendors to make bad decisions on behalf of the plan sponsors that they serve. The area of pharmacy benefits is particularly plagued by this phenomenon – the three largest PBM vendors control about 80% of the market, and they all rely on profit structures that are directly linked to the cost and volume of drugs utilized by patients, creating an unavoidable conflict of interest as they attempt to support the plan sponsors’ objectives.

What are the key challenges and top healthcare benefit priorities for employers?

The key challenges and top priorities are related. The ultimate goal is to ensure that plan members understand their health benefits and can access the most appropriate care at the best price. “But how can employers accomplish this when everything is opaque and siloed in healthcare?” asks Dr. Budhrani.

Designing a cost-effective health benefits program with high satisfaction that drives good health outcomes requires understanding the costs, finding truly aligned partners, and bringing all the data together - medical and pharmacy. To that end, most employers are prioritizing securing their data and the resources needed to analyze the data so they can make more informed decisions and meet their fiduciary obligations under ERISA.

Reining in skyrocketing pharmacy program costs is also at the top of the priority list for 2025. As noted above, this requires access to the claims data and the ability to dig into it. In the big picture, Josh sees employers prioritizing evaluating their pharmacy benefit manager (PBM) relationships with greater scrutiny than ever before. Making coverage decisions around GLP-1s is also a challenge and priority, as there is mounting interest from employees in having access to these medications1.

Dr. Budhrani says that primary care and providing access to mental health coverage remain essential focus areas for employers. Leveraging virtual care/telehealth to help improve access and control costs is a priority, but member engagement and education remain challenges to driving greater utilization of these services. He notes that crafting more equitable benefits is a unique challenge, and aligning with the right vendors for coverage of fertility treatment or substance abuse, as two examples, is also top of mind.

What are three ways you can lower your healthcare costs today?

First, Josh sees some traditional PBMs making “unchecked profits” at the expense of ERISA plan sponsors via repeated early refills through the PBMs’ owned pharmacies. Whether it’s a prescription for a GLP-1 or Humira, this form of waste is hiding in plain sight. Plan members end up with potentially substantial excess supply of their medication because the dispensing of a refill is triggered too soon after the prior prescription was dispensed. Over the course of a year, this can amount to tens of thousands of dollars’ worth of a specialty medication sitting in the refrigerator for a single patient.

Second, Dr. Budhrani says companies need to assist their employees in navigating the appropriate places to go for their care. In other words, “patients need to see primary care providers for their routine, preventive visits while seeking urgent or emergency care for acute necessary conditions.” Setting up the network to include telehealth coverage and access to ambulatory care centers with high patient-reported experience ratings can have an immediate impact on costs for conditions such as upper respiratory ailments, minor injuries (e.g., a sprained ankle), or elective surgical procedures (e.g., hernia repair). Additionally, employers may be able to secure guarantees regarding outcomes.

Finally, Josh said reviewing utilization management programs – e.g., quantity limits, available low-cost alternative [drug] alerts, and prior authorization (PA) approval rates – can provide information that can be acted on immediately. For example, a plan sponsor can ask their PBM partner for the PA approval rates by drug over the past year. As a pattern, he has seen misaligned PBMs approving a higher percentage of PAs for patients where the therapy may not be appropriate – in some cases, employer plan sponsors are seeing PA approval rates of 95% or higher. The PBM may have a profit stake in the outcome of the PA, and some PBMs have resorted to “auto-approval” functions that fast-track dispensing, especially when the prescription is being filled by a PBM’s owned pharmacy.

Thanks for reading — be sure to join the conversation on LinkedIn and let me know your thoughts on this topic!

Quote of the Week

“Success only comes to those who dare to attempt.”
​Mallika Tripathi