Imagine steering a small ship through turbulent waters.

The waves are high, the currents are strong, and the destination seems distant. This is what managing healthcare costs and premiums can feel like for small to medium-sized businesses. But with the right knowledge and strategies, you can navigate these challenges and reach calmer seas. Here’s a comprehensive look at the key elements influencing healthcare costs and premiums.

Factors Affecting Premium Costs

1. Regulatory Changes and Premium Adjustments

The Affordable Care Act (ACA) continues to shape the health insurance market. Under the ACA, premiums can only vary based on age, family size, geography, and tobacco use. This regulation aims to ensure fairness and prevent discrimination based on health status, past insurance claims, gender, occupation, and other factors. OneDigital helps businesses understand these regulations, ensuring compliance and optimizing premiums.

2. Enhanced Premium Tax Credits

Enhanced premium tax credits have made health insurance more affordable for many Americans. These credits reduce the amount enrollees pay based on their income, significantly lowering premiums for those at the lowest income levels. OneDigital assists clients in navigating these tax credits, maximizing savings and reducing overall costs.

“At OneDigital, we’ve walked alongside many small and medium-sized businesses facing the challenge of rising healthcare costs. We're committed to helping you navigate these turbulent waters with the knowledge and resources you need. Together, we can build a brighter future for your business and your employees, filled with hope and opportunity."
 
— Julie Cape, Executive Vice President of Client Services

Key Drivers of Rising Healthcare Costs

1. GLP-1 Drugs

The growing demand for glucagon-like peptide-1 (GLP-1) drugs, such as Ozempic and Mounjaro, is a major factor driving up healthcare costs. These drugs, initially approved for type 2 diabetes, are now widely used for weight loss and other conditions, leading to increased spending. While many small businesses may not include these expensive drugs in their health plans, the overall rise in healthcare costs affects everyone. OneDigital provides guidance on managing prescription drug costs and exploring alternative solutions to keep expenses in check.

2. General Pharmacy Spend

Beyond GLP-1s, the overall increase in prescription drug prices and the introduction of high-cost specialty medications are significant contributors to rising healthcare costs. Specialty medication costs have grown to account for 54% of total pharmacy spend over the past year, while still only accounting for less than 2% of the overall claim utilization. OneDigital offers strategies to manage pharmacy spend, including negotiating better rates with providers, which is especially crucial for small businesses with limited bargaining power.

3. Advanced Treatments and Therapies

Innovative treatments, including cell and gene therapies, offer groundbreaking medical advancements but come with hefty price tags. These therapies, used to treat conditions like cancer and spinal muscular atrophy, can cost between $250,000 and $4.25 million per dose. Small businesses often struggle to afford these treatments, making it essential to evaluate cost-effective options. OneDigital supports businesses in discovering the most affordable treatments for their employees.

4. Biosimilars

While biosimilars offer a lower-cost alternative, their adoption faces challenges, including drug exclusivity rights and regulatory hurdles. We guide clients through these complexities and help them incorporate biosimilars into their health plans, providing a more affordable option for small businesses.

5. Healthcare Labor Costs

Rising employment and salary demands in the healthcare sector, coupled with general inflation, directly impact healthcare costs. The shortage of healthcare workers, driven by an aging population and high burnout rates, exacerbates this issue. Small businesses, in particular, feel the pinch as they compete with larger companies for talent. As collaborative partners, we help businesses develop strategies to manage labor costs while ensuring their healthcare benefits remain competitive.

6. Chronic Health Conditions

Chronic and mental health conditions account for around 90% of U.S. healthcare spending. Conditions like heart disease, stroke, diabetes, and obesity are prevalent and costly, with an increasing number of individuals having multiple chronic diseases. Small businesses often lack the resources to provide comprehensive wellness programs. OneDigital offers wellness programs and resources to help manage these conditions, ultimately reducing overall healthcare costs.

The Path Forward: Smart Strategies for Managing Healthcare Costs

Navigating the rising tide of healthcare costs and premiums requires a strategic approach. By understanding the factors at play and leveraging available resources, small to medium-sized business owners can better manage their healthcare expenses and ensure the well-being of their employees. Stay informed, explore cost-saving opportunities, and make proactive decisions to thrive in this evolving landscape.

Partner with us today to build a cost-effective benefits strategy — Get Started Now.

Sources:

[1] Commonwealth Fund: Enhanced Premium Tax Credits for ACA Health Plans
[2] Investopedia: Slash Your 2025 Health Insurance Premiums to $10 or Less
[3] PwC Health Research Institute: Medical Cost Trend: Behind the Numbers 2025
[4] Advisory Board: Charted: Expected Healthcare Cost Increases for 2025
[5] Mercer: Survey: Employers Expect Third Year of High Health Cost Growth in 2025
[6] American Academy of Actuaries: Drivers of 2025 Health Insurance Premium Changes
[7] Retired Life Tips: Why Health Insurance Costs are Rising in 2025
[8] Thatch Blog: 22 Health Insurance Industry Trends and Statistics for 2025
[9] Mordor Intelligence: United States Health and Medical Insurance Market Size
[10] Deloitte Insights: 2025 US Health Care Outlook
[11] AJMC: IQVIA Report Highlights Shifts in Medicine Use, Spending Across Therapy Areas