GLP-1 spending jumped nearly 84%. Here's what that means for your health plan

Have you looked at your pharmacy spend lately? If your last renewal came in higher than you expected, you're not imagining things. And you're definitely not alone.

What's happening

New numbers from Blue Cross Blue Shield point to two big drivers behind rising health plan spending: people are using more care, and GLP-1 drugs are costing a lot more. How much more? Blue Cross Blue Shield found that GLP-1 spending grew by nearly 84%. Every other retail drug, taken together, grew 9.6%.

Read that again. One category of drugs grew almost nine times faster than everything else on the pharmacy shelf.

I'm not here to debate whether these drugs are good or bad. That's a conversation for patients and their doctors. My point is simpler. Demand is high, the drugs are expensive, and somebody has to pay the bill.

Why it matters to a business owner

That somebody is you. And your employees.

When pharmacy costs climb, plan costs climb. When plan costs climb, the renewal goes up. And when the renewal goes up, you end up having the same conversation a lot of owners have every fall: Do we eat the increase, cut the plan, or push more of it onto our people?

None of those options feel great. Eating it squeezes your margin. Cutting the plan makes it harder to keep good people. Pushing it onto employees means smaller paychecks for the same people you're trying to keep.

Here's the part that bugs me. The business didn't do anything wrong. Your team didn't do anything wrong. The cost just showed up.

The bigger point

This isn't a one-year blip. Every year there seems to be a new reason costs are going up. Last year it was something else. Next year it will probably be something else again. GLP-1s are just the newest line item in a trend that has been heading in the same direction for a long time.

And most of the fixes we're offered don't really fix anything. Higher deductibles, higher copays, narrower networks, and bigger employee contributions. Those don't lower the cost. They move it, usually from the company's books to the employee's kitchen table.

How long can that keep working? At some point you're not offering a benefit anymore. You're handing out a bill.

A different approach

I'm just a simple man, so here's the simple version. Most businesses can't control what drugs cost. But you can control how your payroll is structured.

The strategy I help employers put in place is a payroll-structuring approach that layers on top of the benefits you already have. You keep your current carrier, your broker, your payroll provider, and your plan. Nothing gets ripped out and replaced.

What changes is how the dollars move. Set up correctly, it can increase take-home pay for most employees and reduce the employer's payroll tax exposure at the same time. It works for any organization with W-2 employees, from small businesses to government entities. The results depend on each employee having enough tax savings, which is true for most full-time employees.

That's what I mean by business financial freedom. Not a magic trick. Just more margin, more control over costs, and a better shot at keeping the people who make your business run.

Where your employees' freedom starts

There's another side to this I don't want to skip. When an employee's take-home pay goes up, that's real money in a real household. It might mean a little less stress at the end of the month, a credit card balance that finally starts going down, or the first bit of savings they've had in a while. That extra take-home pay is where their own financial freedom starts.

That's the idea behind The Freedom Ledger: a healthy business and healthy households moving in the same direction. If you want to look at the household side for yourself, I write about that at freedom.chrisattaway.com.

Want to see what this could look like for your team?

In a free 15-minute call, I'll ask a few questions about your workforce and current setup and tell you honestly whether a deeper look makes sense. No pressure, and nothing changes with your carrier, broker or payroll company.

Book a strategy call or call or text me at 386.346.2683.

— Chris Attaway, Chris Attaway Consulting

This article is for educational purposes only and is not tax, legal or financial advice. Results depend on each organization's situation.