Analysts predict another difficult year for employers as health benefit costs are slated to rise by 5.8% Mercer’s recent “National Survey of Employer Sponsored Health Plans” predicts the surge in 2025 will mimic the increases seen in 2023 and 2024. The substantial annual increase is a shift from previous decades, where annual increases hovered around 3%. Without implementing cost-cutting measures, employees could see a jump in their premiums and copays.

Why are costs going up again?

Mercer’s report listed three main elements that are contributing to healthcare cost increases for employers.

1. Worker demand pressures. There are not enough healthcare workers across the country, which makes the market more competitive and increases labor costs.
2. Provider consolidation:  With a wave of hospital and healthcare provider mergers, there is less competition, which drives up costs.
3. Prescription price increases: Prescription drug costs continue to rise above inflation, mainly driven by specialty drug treatments, such as GLP-1 medications. Employers reported a 7.2% increase in drug benefit costs per employee for 2024.

What are employers likely to do about rising costs?

In response to the cost news, 53% of employers reported plans to implement cost-cutting measures. Unfortunately, most of the cutting options are unpopular with employees. Increasing annual deductible limits, increasing copays, more liberal use of prior authorization, and increasing premiums all shift part of the financial burden onto workers. While these efforts control overall healthcare costs, they also create affordability issues for employees.

RazorMetrics lowers costs without unpopular strategies.

Employers need innovative ways to manage spending without sacrificing the quality of care for their employees. This is where RazorMetrics’ powerful solution fits in. Using AI and advanced data analytics, RazorMetrics identifies pain-free, cost-saving opportunities. RazorMetrics provides the following cost-saving options for employers:

• Formulary optimization with therapeutic interchange. The platform suggests a lower-cost, equally effective medication directly to the physician for approval.

• Polypharmacy management. One of RazorMetrics’ standout programs is our patent-pending polypharmacy solution. Nearly 20% of adults aged 40-79 are polypharmacy, meaning they take at least five prescription medications regularly. Patients on 5-9 medications have higher costs, complicated medication regimens, and a 50% higher chance of an adverse drug interaction. Adverse drug events cause 1.3 million emergency department visits each year and about 350,000 hospitalizations.
• Discount opportunities. Mail pharmacies save patients on average $119 annually off their drug costs, and it saves 100% off this prescription for their insurance carrier because it moves the patient to cash pay. Also, it works on the total member base, not just those with a viable low-cost switch. Discount cards save patients 81% off medication costs on average and 100% off the prescription cost for the insurance carrier since it moves the patient to cash pay.  Also, it works for the entire member base.
• Discontinuation. Between 1.5% and 5% of medications are dispensed after discontinuation in the Electronic Health Record, 34% of which are high-risk for adverse effects. RazorMetrics tracks discontinuations and flags prescription pick-ups that were not supposed to happen. The member, their physician, and pharmacist are contacted to correct the error.

• Biosimilars. Driven by specialty drugs, pharmacy costs are growing twice the rate of overall health benefit costs. RazorMetrics covers 15 specialty drugs and biosimilars, with more being added every month. We give them the lowest-cost therapeutically equivalent alternative based on client formularies and the latest in biosimilar marketization. 

By offering these tailored solutions, RazorMetrics helps employers lower prescription drug costs while maintaining high-quality healthcare for their employees. This approach not only controls rising healthcare spending but also ensures that employees can afford appropriate care. Employers who take proactive steps today will protect both their bottom line and their employees’ access to quality care in 2025 and beyond.