Navigating Rising Healthcare Costs In 2025

Understanding & Addressing Rising Benefit Costs

Health care costs are set to rise significantly in 2025, with industry projections estimating a 7%-8% increase for employer-sponsored plans. This surge, driven largely by the growing use of glucagon-like peptide-1 (GLP-1) medications, poses challenges for employers and employees alike. As a local leader in employee benefits administration, The Siekmann Company is at the forefront of helping organizations manage these escalating costs while optimizing employee benefits offerings.

The GLP-1 Boom: A Key Driver Of Health Care Costs

GLP-1 medications, initially approved by the FDA in 2005 for Type 2 diabetes, have gained traction for their weight loss benefits, with the first approval for obesity treatment coming in 2014. Drugs like Ozempic, Wegovy, and Mounjaro have surged in popularity, fueled by their effectiveness in addressing obesity—a condition affecting over 40% of U.S. adults. A KFF poll indicates that 1 in 8 Americans have used a GLP-1 drug, with usage projected to reach 9% of the population by 2030, according to J.P. Morgan.

This rising demand is transforming employee benefits landscapes. Employers now face pressure to include GLP-1 coverage in their plans, not just for diabetes but also for weight loss—a shift that significantly impacts employee benefits cost management. The Siekmann Company, as an expert employee benefits consultant, recognizes that these medications, while beneficial, come with a hefty price tag, averaging $1,000 per month per individual.

Why Costs Are Climbing

The Business Group on Health (BGH) survey of large employers, covering 17.1 million Americans, highlights GLP-1 drugs as a primary contributor to the anticipated 7.8% health care cost increase in 2025. More than 57% of respondents noted that GLP-1 spending is driving costs “to a great or very great extent.” Additional pressures from pharmacy expenses and emerging therapies like cell and gene treatments further complicate employee benefits cost management. Despite these challenges, many employers plan to absorb the majority of these costs rather than pass them onto employees—a decision that underscores the need for strategic employee benefits administration.

GLP-1 drugs’ versatility adds another layer of complexity. Beyond diabetes and obesity, they show promise in treating conditions like heart disease, Alzheimer’s, and sleep apnea, with over 100 new obesity drugs in development. As pharmaceutical innovation accelerates, employers must prepare for sustained cost pressures. We advise organizations to proactively address these trends through tailored employee benefits strategies.

Strategic Solutions: Outsource Benefits Administration For Cost Control

Managing the financial implications of GLP-1 coverage requires a nuanced approach. While many employers historically limited GLP-1 coverage to diabetes treatment, employee demand and the obesity epidemic are prompting broader inclusion. According to Mercer, 44% of U.S. employers with 500+ employees covered weight-loss drugs in 2024, up from 41% in 2023—a trend likely to grow in 2025.

The Siekmann Company advocates for employers to outsource benefits administration to experts who can implement cost-effective solutions. Here are proven strategies to balance employee needs with fiscal responsibility:

• Coverage Criteria Adjustments: Limit GLP-1 coverage to specific conditions (e.g., diabetes) or raise eligibility thresholds, such as requiring a BMI of 30 or 27 with comorbidities.

• Utilization Controls: Implement prior authorization or step therapy to ensure appropriate use, reducing unnecessary expenses.

• Integrated Wellness Programs: Pair GLP-1 coverage with lifestyle initiatives to enhance effectiveness and support long-term weight management, potentially reducing reliance on costly medications.

• Pharmacy Savings: Leverage rebates, coupons, and alternative pharmacy options to offset costs.

• Cost-Sharing Adjustments: Modify deductibles, copays, or premiums to distribute expenses more evenly between employer and employee.

By partnering with an employee benefits consultant like The Siekmann Company, organizations can customize these approaches to align with their workforce demographics and budget constraints.

The Business Case For Comprehensive Benefits

Investing in GLP-1 coverage isn’t just about meeting employee expectations—it’s a strategic move to curb broader costs. Obesity-related expenses, including medical claims, workers’ compensation, and absenteeism, cost employers more than $400 billion in 2023. Employees with obesity can incur excess costs of $1,200 to $6,700 annually. Effective employee benefits administration that addresses these issues can yield a healthier, more productive workforce, ultimately benefiting the bottom line.

However, the long-term commitment required for GLP-1 efficacy—combined with high costs—makes some employers hesitant. The Siekmann Company emphasizes that outsourcing benefits administration to specialists can streamline decision-making, ensuring coverage decisions are data-driven and cost-efficient.

Looking Ahead: Proactive Employee Benefits Cost Management

As GLP-1 popularity continues to rise, alongside innovations like the Medicare Drug Price Negotiation Program’s impact on drugs like Ozempic and Wegovy, employers must stay ahead of the curve. The Siekmann Company offers actionable insights and resources to navigate this evolving landscape. By 2026, new GLP-1 drugs will further challenge employee benefits cost management, making proactive planning essential.

Partner With The Siekmann Company

Rising health care costs are inevitable, but their impact can be mitigated with the right employee benefits strategy. The Siekmann Company stands ready to assist employers in optimizing their plans, whether through outsourcing benefits administration or consulting on cost-containment measures.

Call 614.873.5200 or email info@siekmannco.com to discuss how to manage employee benefits effectively in 2025 and beyond.