The Factors Driving Employer Healthcare Costs Higher

With healthcare costs dominating the conversation in recent years, the topic of employer-covered healthcare is a key issue. With most Americans getting their health insurance coverage through their employers, this is a key area that impacts how much people feel the burden of healthcare costs.

One way that employers are looking to reduce costs without impacting benefits is by turning to digital health platforms. However, the evidence is still unclear as to how much of a positive impact that these platforms actually have.

Pharmaceutical Executive spoke with Michael Abrams, managing partner at global healthcare consultancy Numerof & Associates about strategies employers are using to reduce costs while still providing effective coverage. He also discusses the impact of digital health and how it appears to actually be impacting the market.

Pharmaceutical Executive: What’s causing employer healthcare costs to rise?
Michael Abrams: Employer healthcare costs are rising alongside the general cost of healthcare delivery, and frankly, I don't see much end in sight. The underlying causes are many, but the predominant factor in my view is consolidation. In many markets, consolidation has given healthcare delivery organizations significant market power over insurance companies — power they are able to use to exact a premium for their services. That dynamic, combined with a broader set of structural incentives in healthcare delivery that encourages organizations to sell patients more services, and often more expensive services, than they actually need, is driving much of what we are seeing.