The weight loss drug revolution is helping fuel rising health care costs among employers, who are expanding their benefits to keep up with the kind of medical care that their employees want.
Coverage for obesity drugs like Ozempic and Wegovy among large companies (with 500 or more employees) rose to 44% this year, up from 41% last year,according to a new study from HR consulting company Mercer released this week. And around 64% of companies with 20,000 workers or more now cover it, compared to 56% in 2023.
“Expanding health benefits can play a crucial role in attracting and retaining talent,” Tracy Watts, national leader for U.S. health policy at Mercer, tells Fortune. “While the rising costs of health benefits pose challenges, ensuring employees have access to quality care is paramount,” she notes.
That demand for those weight loss drugs is the main driver behind increasing spending for employers. Average health care cost per employee increased 4.5% this year to $16,501, compared to $15,797 in 2023 to $16,501, according to the study. And employer health care costs are expected to rise another 5.8% in 2025.
About 12% of adults report having used some type of GLP-1 drug, a category that includes Ozemic and Wegovy, according to a May study from the Kaiser Family Foundation, a non-profit health care policy research institute. Given that roughly 40% of adults in the U.S. are considered obese, according to the Centers for Disease Control and Prevention, the demand is likely to stay strong.
Other specialized medical treatment is also leading to increased employer spending on health care. Fertility treatments, including elective egg and sperm freezing, are becoming more common in workplace benefits packages, and are now offered by 64% of large employers with more than 500 employees, the study found. Employers are also providing more specialized support to employees with cancer; roughly two-thirds of large employers offer some services that include things like case management, caregiver resources and workplace support.
To try and control costs, employers are expanding their portfolio of medical plan choices. Roughly 65% of large employers now offer three or more health care plans, including exclusive provider organization (EPO) plans, which use a closed provider network to keep costs down and are less expensive than traditional PPO options. Virtual primary care services are also gaining traction.
When it comes to controlling costs around weight-loss medications specifically, Watts recommends that companies work with pharmacy benefit managers to implement clinical management programs for patients. But they should still take care to offer those options.
These medications “may turn the tide on the obesity epidemic and positively impact downstream medical costs,” said Watts. She adds that “even if employees or their families do not personally need certain specialized programs or coverages, they appreciate being part of an organization that prioritizes the well-being of all employees,” says Watts
