By: TAHP | Friday, October 11, 2024

Texas Employers Absorb Rising Health Premiums Amid Surging GLP-1 Costs

Premiums for employer-provided health coverage are set to increase by 7% in 2024, according to the latest KFF report. This brings the total cost for family coverage to an average of $25,572 annually. While this rise follows a broader trend, employers are absorbing most of these costs rather than passing them on to employees, highlighting a sensitivity to employees’ financial constraints.

The Role of GLP-1 Medications

A key factor driving these cost increases is the growing demand for GLP-1 medications, a class of drugs used primarily for diabetes and increasingly for weight loss. Large employers are expanding their coverage to include these expensive medications, bracing for the anticipated impact on drug spending. The popularity of GLP-1 drugs has surged, as they have proven effective not only for diabetes but also for significant weight loss, making them highly sought after by patients.

By the Numbers

The KFF report underscores several key figures:

• 7% increase: Premiums for family coverage under employer-sponsored plans are increasing by 7% in 2024, marking a 25% hike over the past five years
• $6,296 average family coverage: Employees will contribute, on average, $6,296 toward their family coverage, a sum that has remained relatively stable thanks to employers’ efforts to bear the bulk of the rising costs.
• Stable deductibles and co-pays: Most employers are absorbing increased premiums without raising deductibles or co-pays, reflecting a commitment to keeping out-of-pocket costs manageable for employees.

Why This Matters: In Texas, where employer-provided health coverage insures roughly 14 million people, these rising costs impact a significant portion of the population. While inflation has eased in other sectors, healthcare costs continue to rise, straining both employers and employees alike. Employer-provided coverage remains essential, but affordability challenges persist as healthcare expenses climb.

Employers Take a Stand: In response to escalating healthcare costs, employers are choosing to absorb much of the expense rather than transferring the burden to employees. This approach underscores their commitment to keeping coverage affordable, especially as wages often fail to keep pace with rising living costs. However, the long-term sustainability of this model is uncertain, particularly as healthcare costs continue to escalate.

Proposals to Curb Healthcare Costs in Texas

1. Mandate Moratorium and Transparency: Texas should avoid new mandates that add hidden costs to insurance coverage. Lawmakers are urged to understand the financial impact of mandates before implementation.
2. Expand Affordable Coverage Alternatives: Policymakers should consider offering more affordable insurance options free from costly overregulation. This could give employers and employees more flexibility in choosing plans that fit their budgets.
3. Modernize Outdated Regulations: Allowing market-driven solutions could help lower health spending, but outdated regulations often obstruct innovation. Texas should lift restrictions on models like direct primary care and allow plans to incentivize patients to seek high-value care.
4. Combat Rising Healthcare Prices: Enforcing price transparency, banning anti-competitive pricing, and eliminating abusive facility fees could help control healthcare expenses across the state.
5. Protect Employer-Provided Coverage: Defending ERISA flexibility and opposing mandates on self-funded employers are crucial to maintaining affordable employer-provided coverage.

The Bottom Line: As healthcare premiums continue to rise, Texas must prioritize protecting affordable employer-provided coverage. Employers play a critical role in ensuring healthcare remains accessible to millions of Texans, and avoiding unnecessary mandates could be a key step in controlling costs for both businesses and families.