Two new reports say employers’ health care costs could rise by as much as 8 to 9 percent next year, partly due to the increase in GLP-1 use.

An August report from major insurance broker Aon predicts health insurance costs will rise 9%, with a 6.4% increase expected in 2023 and 2024. That means workers could end up paying up to 20% of their premiums themselves, an average premium of $3,040 per person, or about $117 per paycheck.

How much is GLP-1 to blame? Aon found that GLP-1 use will cost employer health plans $6.25 per member per month in 2023, a 224% increase over 2022. Data on spending for 2024 is not yet available, but one study shows that GLP-1 use for diabetes increased 15.6% in 2024 compared to the previous year and for weight loss increased 78%.

Meanwhile, the German Health Industry Association (BGH) is forecasting an increase in employer health care costs of 8 percent, according to survey results published this week.

However, the group also found that costs have increased by 50% cumulatively since 2017. Spending on drugs and treatments is driving up costs—from 21% of spending in 2021 to 27% of spending in 2023. This includes GLP-1s, but the exact amount they contribute to the increased spending was not available in the survey results.

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In a statement, BGH said the expected increase was due to “inflation, increased demand for expensive drugs such as GLP-1, potentially curative but expensive cell and gene therapies, and the ongoing burden of treating cancer and other chronic diseases.”

Another important disease that leads to higher costs besides cancer is cardiac treatment and cardiovascular care, according to the report.

GLP-1 Costs

BGH prepared its report after surveying 125 large employers that cover health care costs for a total of 17 million people in the United States. Currently, 96 percent of employers cover GLP-1 measures for diabetes and 67 percent cover those approved for obesity, according to BGH, which did not name companies.

“Approximately 79 percent of employers reported that they are seeing increased interest in obesity medications, including GLP-1, among their insureds. It is therefore not surprising that 96 percent of employers expressed concerns about the long-term cost impact of GLP-1,” BGH said.

The only bright spot, according to Aon, is Eli Lilly (LLY), which has priced its weight-loss drug Zepbound at $1,060, slightly cheaper than Novo Nordisk’s (NVO) Wegovy at $1,349. This means the market is prepared for future competition.

“Increased competition should drive down prices,” said Tracy Spencer, head of Aon’s national pharmacy practice, adding that it will take some time for that to happen.

The story continues

“Unfortunately, supply issues in GLP-1 manufacturing and drug shortages are limiting the impact of the pricing pressure that should normally occur when competition increases and supplies are stable,” she said.

Anjalee Khemlani is the senior health reporter at Yahoo Finance and covers all things related to pharma, insurance, care services, digital health, PBMs, and health policy and policy. Follow Anjalee on all social media platforms @AnjKhem.

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