Aug 14, 2019

How employers are tackling health costs

Illustration: Rebecca Zisser/Axios

Employers have more power over our health care system than anyone else, and they're getting more creative with how to wield it to lower costs, according to a new survey of large employers.

Why it matters: U.S. health care spending is going to become increasingly unsustainable until employers — which cover a plurality of Americans — decide they've had enough.

  • The survey, conducted by the National Business Group on Health, is another sign that they're getting closer to that point.
  • A PwC report recently predicted that 2020 will be "a year in which more employers fight back."

Details: The survey reflects 147 large employers covering 15 million people.

  • It found that employers are increasingly focused on primary care, as prevention is a lot more cost-effective than treatment.
  • 34% of the employers said primary care will be available on or near the worksite next year, and 24% said they'll steer patients to physician-based alternative care organizations or high performance networks.

Additionally, employers are grappling with how to handle the services that do drive their high costs.

  • More than a quarter are expanding their use of centers of excellence in areas like orthopedics and fertility, and many said they're considering alternate ways of paying for new million-dollar specialty drugs.

Yes, but: Even with these strategies, costs are still expected to rise by 5%.

Go deeper: If there's a turning point on health costs, it'll come from employers

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The growing employer health care crisis

Reproduced from Peter-Kaiser Health System Tracker; Chart: Axios Visuals

The past decade has seen enormous growth in health care costs paid by both employees and employers, creating the context for some of today's biggest political debates as well as teeing up more problems for the future.

Yes, but: There are some signs that employers have maxed out their ability to shift costs to employees.

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Health care dominates 2019 ad spending

Data: Advertising Analytics; Chart: Axios Visuals

More than half of all issue advertising this year has been on health care, and that spending will only increase as the 2020 campaign gets closer.

Between the lines: Most of the top health care spenders are focused on issues like surprise medical bills and drug prices — many of which would cut into the health care industry's profits.

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Insurers want a new model to pay for expensive drugs

Illustration: Sarah Grillo/Axios

Insurers are trying to figure out ways to help employers afford to cover gene therapies, which can carry price tags in the millions, WSJ reports.

Driving the news: Cigna announced yesterday that it's starting a new program in which employers and insurers will pay monthly for a service that covers gene therapies and review who can get the drugs, which can be dispensed through Cigna's specialty pharmacy.

Go deeperArrowSep 6, 2019