With healthcare costs expected to climb nearly 8% in 2025, employers face mounting financial pressure, according to a new report from the Business Group on Health. That marks more than a 50% increase since 2017, and companies may no longer be able to absorb the growing burden.

“We are now experiencing the highest year-over-year increase in more than a decade,” said Jim Winkler, chief strategy officer at the Business Group on Health. “Employers have absorbed the majority of cost increases over the past four years, and they likely cannot continue to do so.”

A major factor behind rising expenses is pharmacy costs, which now account for 27% of healthcare spending, up from 21% in 2021. GLP-1 weight-loss drugs like Ozempic, Wegovy, and Mounjaro are both clinically effective and increasingly popular — but come at a high cost of $700 to $800 per month.

“GLP-1s are a major contributor to pharmacy cost overall, especially as utilization extends to medical conditions beyond diabetes and weight management,” Winkler added.

Rising rates of chronic illness, delayed diagnoses, and reduced competition among healthcare providers are compounding cost increases. But experts recommend six strategies employers can adopt now to mitigate the damage:

1. Hold vendors accountable. Use RFPs to demand better pricing and measurable outcomes. Replace underperformers, but recognize that “demonstrating ROI for wellness or other cost-containment measures can be challenging,” said Jennifer Chang of SHRM.
2. Embrace value-based care. Partner with centers of excellence and adopt advanced primary care models that tie reimbursement to managing chronic conditions.
3. Manage pharmacy spend. Adopt transparent PBMs, promote biosimilars, and combine GLP-1 access with broader condition management. “Pharmacy is actually multiple programs that need to be fully integrated,” Winkler said.
4. Help employees navigate care. Tools like care navigators and employee trainings can increase usage of high-quality, cost-effective providers.
5. Build onsite clinics. Worksite health centers (WHCs) offer preventive care and chronic disease management, with ROIs ranging from $1.09 to $15.88 per dollar spent. “They’ve been running into a brick wall” with traditional care, said Megan McHugh of Northwestern.
6. Leverage analytics. Use claims and network data to identify cost drivers and tailor interventions accordingly.

Yet, experts warn against pushing too hard, too fast.

Excessive cost-sharing or sudden benefit changes could alienate workers. “It can lead to backlash,” Chang said, if employees perceive these moves as compensation cuts.

Instead, employers should tailor strategies to their workforce, roll out changes gradually, and continuously adjust based on feedback. “Employers need to consider their organizational culture, including its tolerance for disruptive change,” Winkler advised.

As companies try to balance affordability with care quality, creating a health-focused workplace culture will be essential. This includes investing in wellness-friendly facilities like fitness centers and healthy cafeterias, as well as mental health supports.

Experts say the most successful cost-containment programs are inclusive, transparent, and personalized. “One-size-fits-all health plans don’t work anymore,” Chang said.

By taking a thoughtful, data-driven approach, employers can protect their bottom line without sacrificing employee well-being — a critical goal in 2025’s increasingly complex healthcare landscape.

Originally reported by Michael Brady in Construction Dive.