NEW YORK--(BUSINESS WIRE)--The annual cost trend for medical plans is projected to increase to 8 percent, according to new data from the 2025 Segal Health Plan Cost Trend Survey, released by leading benefits and HR consulting firm Segal. Survey respondents anticipate that medical plan costs will rise higher than any of the previous 15 years of reported actuals, aside from the COVID rebound year of 2021. Price inflation is the dominant factor on medical costs, as providers, suppliers and manufacturers seek to maintain or rebuild margins in the face of their own increased costs.
This year’s survey also found that the high price tag and surging utilization of GLP-1s for weight loss treatment are causing prescription drug plans to become significantly more expensive. While these medications can be effective at achieving near-term weight loss, the health benefit and time horizon for potentially offsetting the cost benefit from that improved health is yet to be determined. The cost-benefit analysis for anti-obesity medications (AOMs) is different from other interventions, due both to the high price point and demand among lower-risk individuals. It may require years or even decades of sustained results before potentially avoiding health issues on the severity level of a major adverse cardiovascular event such as a heart attack or stroke. In the meantime, these medications have caused a surge in prescription drug spending, which is expected to continue rising.
The weight loss drug coverage conundrum is present in the top cost management strategies for 2025, as the survey’s top two strategies are related to managing GLP-1s. All of the top five cost management strategies are related to prescription drugs or managing conditions like diabetes or obesity. Many employers are still determining the optimal approach for covering weight loss drugs, while also serving as effective stewards of plan funds. In addition, Segal’s survey report shows health plans are leveraging new virtual tools and health programs to manage chronic conditions as part of a holistic strategy. There is also increased interest and optimism in plans working to achieve better financial results through the use of biosimilars and custom prescription drug formularies.
“The urgent focus for health plans in 2025 is addressing obesity, and what role anti-obesity medications should or should not play in that strategy,” said Eric Miller, Vice President and Consulting Actuary in the National Health Consulting and Analytics practice at Segal. “Employers want to provide robust health benefits to their employees and families to maintain healthy lifestyles, including being at a healthy weight. However, the high cost, high demand, and varying time horizons for realizing improved health outcomes creates a challenge for optimizing the use of GLP-1s, and that challenge is expected to escalate in 2025 and beyond.”
Additional key survey findings include:
- For 2025, specialty drug trend is projected to be 13.3 percent primarily due to utilization of new pricey specialty drugs replacing lower-cost therapies.
- Trend projections for dental provider organizations (DPO) are 4.5 percent.
- Expected vision trend is 3.0 percent for reasonable and customary (R&C) plans.
- Projected medical trend for Medicare-eligible retirees with Medicare Advantage (MA) PPO plans is 4.9 percent, but the Medicare Part D trend is 8.9 percent.
The survey report also reveals facts and figures derived from Segal’s proprietary data warehouse to provide additional context for health plans regarding:
- Trends in cancer care, including the most common types and recommendations for preventive screenings.
- Mental health services, including top diagnoses and the impact of virtual visits.
- Prescription drug trends, including the top therapeutic classes and individual drugs.
The Segal survey, now in its 28th year, is recognized as one of the most definitive surveys on employer-sponsored health plans and provides industry-leading guidance on how plan sponsors can alleviate the stress of health costs. Participants include health insurers, managed care organizations (MCOs), pharmacy benefit managers (PBMs) and third-party administrators (TPAs). Survey respondents represent about 80 percent of the commercially insured and self-insured market. Respondents shared their trend forecasts for medical, prescription drug, dental and vision coverage and actual health cost trends based on their group health plan experience.
About Segal
Segal delivers trusted advice that improves lives. Segal is a privately owned benefits, human capital, communications, technology, insurance brokerage and investment consulting firm with more than 1,000 employees throughout the U.S. and Canada. Segal, Segal Marco Advisors and Segal Benz are all members of the Segal family.
