Garrett Gomez
Principal | Director, Actuarial & Underwriting, Employee Health & Benefits Division
Entering 2025, we see that the employer-sponsored health benefits landscape is rapidly transforming. It is imperative that employers have a comprehensive understanding of the current state of the market to maximize health benefits programs that impact the workforce and drive business success.
Navigating cost and volatility
Healthcare inflation remains a critical challenge, with costs escalating sharply in 2024. This surge was fueled by factors such as rising healthcare utilization, increasing labor costs, surging pharmacy costs, persistent provider consolidation, and the introduction of expensive gene and cell therapies.
Claims volatility poses another significant concern, as unexpected surges in healthcare utilization and high-cost treatments can lead to unpredictable claim patterns. Notably, high-cost claimants—representing less than five percent of the membership—account for over 50% of total costs, predominantly driven by conditions such as cancer, musculoskeletal disorders, and cardiovascular diseases.
To address these challenges, alternative funding strategies, such as self-funding with stand-alone stop-loss or captive insurance, are becoming the preferred approach for many employers seeking greater control over healthcare expenditures and risk mitigation.
Enhancing access and quality
Employers are increasingly prioritizing the delivery of high-quality primary care, behavioral health services, family-building support, and chronic disease management. Regular evaluations of point solutions are essential to optimize investments that address specific healthcare needs, effectively curbing rising costs while enhancing access to care. Additionally, high-performance healthcare networks serve as a valuable avenue for improving care offerings to employees.
In the pharmaceutical arena, GLP-1 medications are emerging as a promising solution for managing diabetes and related conditions. These therapies have demonstrated efficacy in improving patient outcomes and reducing costs associated with diabetes-related complications. Implementing tight utilization management is an important step to ensure appropriate treatment usage and prevent unnecessary expenditures, particularly as GLP-1s currently represent more than 10% of total pharmacy costs, according to Rx Solutions.
For health benefits stakeholders, prioritizing access and quality is vital to delivering a beneficial member experience while safeguarding employee well-being and productivity.
Adapting to external forces
Staying attuned to the priorities and actions of the new government administration is another key focus for employers. Agility in responding to potential regulatory changes—such as those affecting the ACA marketplace, Medicare drug pricing, parental leave, and long-term disability mental health parity—will be critical in shaping health benefits strategies.
Organizations must also be prepared to address the implications of climate-related catastrophic events, including floods, hurricanes, and wildfires. One valuable approach is to develop health resiliency programs that support affected employees.
The rise of artificial intelligence in healthcare presents opportunities to enhance personalized care and predictive analytics, enabling employers to tailor benefits that meet the unique needs of their workforce.
By proactively addressing these external factors, stakeholders can develop comprehensive strategies that not only promote employee health and well-being but also foster resilience in the face of evolving legislative, climate, and technological changes.
Looking ahead with strategic focus
Employers will need to navigate an increasingly complex employee health and benefits landscape. A strategic focus on tailoring benefits programs while balancing critical considerations—such as cost, volatility, access, quality, and external influences—will be key to driving organizational success and enhancing employee engagement.
Analyzing health plan utilization trends: key takeaways for benefits leaders
Marsh McLennan Agency (MMA) has conducted a comprehensive analysis of its national book of business, focusing on health plan utilization data through December 31, 2024. This review aims to illuminate the aggregate impacts of current market trends on fee-for-service (FFS) gross medical and pharmacy claims (“MMA Analysis”).
In 2020, the healthcare landscape experienced historically low claims trends. The decline in non-emergent medical utilization significantly outweighed the increases in claims related to COVID-19 testing and treatment. However, as we moved into 2021 and 2022, healthcare claims began to rebound, although they remained slightly below pre-pandemic trend expectations.
As we approached the end of 2023 and moved into 2024, we witnessed a rapid escalation in claims trends in the MMA Analysis, driven by surging inflation and heightened healthcare demand. This shift underscores the need for strategic planning and proactive management of health benefits programs.
The chart below illustrates the MMA Analysis of national fee-for-service (FFS) medical and pharmacy claims, comparing actual claims against expected claims since the onset of the pandemic.
