Group medical cost trend to hit 8% in 2025: PwC
Obesity fighters like Wegovy could help, overall, but are adding $23 per member per month to prescription spending.
The underlying medical cost trend for employers’ group health coverage could stay high in 2025, according to PwC analysts.
The analysts are predicting that the medical cost trend will be 8%.
That compares with PwC group health medical cost trend estimates of 8% for 2023 and 7.5% for this year.
The PwC analysts base their trend estimates on the results of interviews with health plan actuaries.
Medical cost trend indicates what a health plans’ medical costs would be if the plan kept its benefits the same.
The PwC analysts do not give overall health benefits spending figures. Mercer has estimated that employers are spending about $16,000 per employee per year on health benefits, or about $1,333 per employee per month.
Related: Employers should expect higher health care costs in 2024, outpacing inflation
The projected 2025 medical cost trend compares with an overall inflation level of less than 4% and employee wage growth of less than 5%.
The drivers
The projected 2025 medical cost increase is due partly to patients’ moves to get care that was put off during the peak years of the COVID-19 pandemic.
The increase is also due to growing use of Wegovy and other expensive GLP-1 agonists to fight obesity.
Eventually, the GLP-1 agonists could hold down overall health plan spending, by lowering the cost of care related to conditions such as diabetes, cancer and heart disease, the analysts write.
Today, however, employers are noticing the effect of GLP-1 agonists on prescription spending.
The drugs added $23.16 per plan member per month to employers’ prescription costs in the second half of 2023, up from less than $13.56 per member per month in 2022, the PwC analysts say, citing data from Employers Health, a pharmacy benefit management group purchasing organization.
Cost pressure on employer plans could get worse as health care providers try to recover from the effects of the COVID-19 pandemic, tough Medicare and Medicaid reimbursement strategies, and health care workers’ demands for more pay and higher staffing levels, the analysts warn.