Cancer now top driver of employer health care costs

WASHINGTON, D.C. – Cancer has overtaken musculoskeletal conditions as the top driver of large companies’ health care costs, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey.

While the top three conditions fueling health care costs remained the same from last year – they include cardiovascular disease, in addition to cancer and musculoskeletal conditions – 13% of employers said they have seen more late-stage cancers and another 44% anticipate seeing such an increase in the future, likely due to pandemic-related delays in care.

Released today in Washington, D.C., the research findings more broadly showed that as employers continued to have concerns about such issues as health equity and the affordability of health care, they will continue to invest strategically in their health and well-being offerings.

The survey gathered key plan design and health care cost data to create aggregate findings on employer-sponsored health care for the coming year. A total of 135 large employers across varied sectors, who together cover more than 18 million people in the United States, completed the survey between May 31, 2022, and July 13, 2022.

“Survey findings function as a ‘collective snapshot’ that can guide employers as they determine how to maximize employee benefits,” said Ellen Kelsay, president and CEO of Business Group on Health. “Employers shared that they 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.”

More details on employers’ other top areas of concern:

• After experiencing no increase in actual health care cost from 2019 to 2020, employers experienced a significant return to rising costs, with a median 2021 cost increase of 8.2%.

• Despite rising costs, 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 premium). As costs increase, employers have been reluctant to shift costs to employees in the short-term and are looking at fundamental delivery system reforms, such as advanced primary care and centers of excellence for specific health conditions, to address unsustainable health care expenses and prescription drug costs.

• Large employers overwhelmingly (99%) said they were concerned about prescription drug trend. In 2021, 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.

• Long-term mental health issues, both observed and anticipated, are the leading health-related impact of the pandemic, employers said, with increases in medical services due to delayed care a close second. Some 43% have already seen this trend and another 39% anticipate such increases. In response, employers plan to keep many pandemic-related health and well-being offerings in place for the foreseeable future; 85% will do so for mental health.

• While employers will continue to address the affordability of employee premiums and out-of-pocket costs, they remain keenly focused on policy efforts that lower health care and prescription drug costs. Employers are particularly interested in the affordability of maintenance medications, as well as newer gene therapies. In addition, the affordability of mental health services – low- to no-cost virtual health provides affordable access –  is of high importance for 24% of employers.

• Virtual health is at a crossroads, warranting further assessment and refinement. While three-quarters of employers (74%) believe that virtual health will significantly impact future health care delivery, 84% said integrating virtual health and in-person care delivery is critical for success. If integration does not occur, it could lead to the duplication of services, unnecessary care, wasteful spending and a fragmented care experience. Further, employers showed interest in virtual primary care. Some 32% will offer these services in 2022, while a total of 69% may do so in 2025.

• Health and well-being strategy continued to play an integral role in workforce strategy, said 65% of employers, an increase from 42% last year. This is the culmination of several factors over time, including the need to attract and retain employees and support employee overall well-being, and the impact of workforce well-being on business performance and culture.

• Health equity continues to be top of mind for employers, with three in four sharing concern about inequities in their company’s health and well-being initiatives. Most employers plan to address such issues in 2023, and plan to tackle additional social determinants of health, including racism, and across such areas as childcare, transportation and food access/insecurity, in the years 2024 and 2025. Further, while the survey was in the field, the Supreme Court reversed Roe v. Wadeabortion protections, reverting authority to the individual states to control abortion access and related issues. The ruling has exacerbated employer concerns with health equity and health care access.