Employers are among digital health’s most important customer bases, and the Business Group on Health’s annual survey is one of the best ways to get a pulse on their healthcare priorities.
Some stats that caught the eye:
- Employers expect healthcare costs to spike 8% in 2025 – the highest jump in a decade.
- Pharmacy has risen from 21% to 27% of employer healthcare spend from 2021 to 2023.
- Cancer, MSK, and cardiovascular conditions are the top three cost drivers.
- 80% of employers feel pressure for new mental health, obesity, and cancer treatments.
The above chart shows the accelerating climb in employer healthcare costs since 2019, with most of the 28% increase looking like it was absorbed by employer contributions to premiums.
- Cancer was the most commonly cited cost driver in 2024, and 72% of employers noted a higher prevalence of the disease among their workers and their families.
- While some of that can be attributed to delayed care and screenings during the pandemic, it’s also perpetuated by an “alarming” rise of diagnoses in younger people.
GLP-1s, gene therapies, and specialty drugs were another major culprit behind the cost pressure, and over half of employers specifically called out the impact of GLP-1s.
- Nearly all employers cover GLP-1s for diabetes, compared to 67% for obesity and 34% for cardiology (although it appears that cardiology’s share could double by 2027).
- GLP-1s are undoubtedly promising medications, yet 96% of employers worry about their long-term cost implications, and 52% would strongly consider reducing their coverage to better control healthcare expenses.
To reign in costs, employers are actively reevaluating their vendor partnerships, and plan to use upcoming RFPs to negotiate better terms and end relationships with underperformers.
- Six in 10 employers are looking to cut back on the number of vendors they work with, and underutilized solutions will be the first ones on the chopping block.
- Vendor management is at the center of employers’ cost containment strategies, and they’re aiming to integrate benefits to eliminate expenses and simplify the member experience.
The Takeaway
Employers are clearly feeling the pressure to get costs under control, but the areas where they need the most help – obesity care, behavioral health, MSK – are also brimming with digital health startups promising that their solution is the answer. That begs the question: if these tools are actually working, why are costs only continuing to climb faster?
