How to prepare self-insured businesses for rising pharmacy costs

Before the novel coronavirus hit, employer health benefits were already expected to rise 5% this year, according to the National Business Group on Health’s (NBGH) 2020 Large Employers’ Health Care Strategy and Plan Design Survey. The survey estimated the total cost of health care to be $15,375 per employee, including premiums and out-of-pocket costs for employees and dependents. Now, experts are predicting health care costs will rise even higher. Covered California, the state’s insurance marketplace, predicts insurers and employers could face $34 billion to $251 billion in costs related to COVID-19 testing, treatment, and care.

The high and growing cost of prescription drugs already imposed a financial burden on employees and employers who sponsor health benefits. But now pharmacy benefits alone account for 21 cents of every health care dollar, on average.

With benefits being one of the highest cost drivers affecting bottom lines, it is one of the first areas businesses tend to look to when needing to reduce expenses. However, HR leaders can find themselves caught between a rock and a hard place – attempting to reduce benefits costs without leaving employees vulnerable. Benefits consultants and advisors are in a unique position to help their clients make this decision – a particularly important role as our economy tightens – and enable them to reduce the cost of their pharmacy benefits without reducing value for employees.