Employer-Provided Health Care Costs Spike on Weight-Loss Drugs, Inflation

Soaring demand for weight-loss drugs and general inflation pushed up the average costs for U.S. employer-provided health care this year, according to a new survey.

Research by Marsh & McClennan (MMC)-owned human resources consulting firm Mercer found the average per-employee cost for health coverage was 5.2% higher at $15,797. The company noted that was well above the average annual increase of about 3% recorded since 2012. The coverage cost rose by 3.2% in 2022.

Along with inflation, health care costs this year were driven by a sharp rise in spending on prescription drugs, with pharmacy benefit expenses up 8.4%, Mercer found. A “spike” in the use of glucagon-like peptide 1 (GLP-1) drugs to treat diabetes and obesity, such as those in Novo Nordisk’s (NVO) Ozempic and Wegovy, “has had a notable impact on costs.”

The high price of those medicines, and the large number of patients who could benefit from them, “can result in a substantial net new cost to a health plan,” Mercer said. Because they are maintenance drugs, insurers could be paying for coverage over many years, the company said. 

Sunit Patel, chief health actuary at Mercer, pointed out the firm's survey showed employers expect the cost of health coverage will be up another 5.2% in 2024. It's likely employers will continue to pay more because it may take another couple of years for price hikes from higher health care worker wages and medical supply costs to affect health plan costs, he said.