Employer-Driven Health Care: Opportunities for Change

J Clin Pathways. 2025;11(5):52-54.

During the annual budget debate, Congress and state legislatures continued their advocacy and lobbying efforts to advance health care reform. Employers, manufacturers, providers, and consum­er advocates descended upon statehouses and Congress to draw attention to problems in US health care economics. In response to such advocacy and proposed governmental program inter­ventions emanating from new budgets, commercially insured populations have discussed potential strategies with government officials to address these issues.

Despite these efforts, reform outcomes have been uneven, and common issues remain, including the following: employ­ers do not have complete access to claims data from their plan; pricing and claim cost transparency remain mired in supply chain opacity behind multiple contracted entities; and manu­facturers are not collaborating or partnering with employers on insurance solutions for novel therapies.

All parties need to get involved with health care reform, as the government has become engaged in market change. Gov­ernment actions and related market-based cost shifting have created barriers or operational issues for other commercial plan stakeholders. For example, the Health Insurance Portability and Accountability Act (HIPAA) has member data sharing bar­riers to hide the value of medication therapies. In addition, the Affordable Care Act created a fiscal problem for commercial employer plans by removing lifetime health care benefits. Oth­er legislation of government programs impacting health care include Medicaid best price regulation, 340B pricing discounts, prior approvals (PAs) for coverage or formulary procedures, and state regulations that limit individual utilization data and create barriers for member patients to access drugs.

Manufacturers and employers express a desire to learn from each other, yet both fail to understand the other’s operation­al position in the market. For example, personal bankruptcy trends show how employers are confronting medical plan-re­lated or business bankruptcies. The commercial trend of not covering drug therapies is likely to continue, as most employers wait until they are hit with a catastrophic claim to come up with a solution—akin to a deer in headlights.

Commercial employer insurance plans will require a lot of education. Established business groups have been active in education with their members, but that is a small percentage of plans. In January, the National Pharmaceutical Council pro­duced the open-source publication Patient & Caregiver Odys­sey¹ to illustrate challenges patients face in therapeutic care for cell and gene therapy (CAGT). Care guidelines and pathways, while informative clinically, can go awry with the presence of multiple financial adaptations in the market. These adaptations, used by both government and commercial plan administrators, often conflict, ultimately preventing optimal care for a patient.

As novel therapies and CAGTs grow in number in the market, there are key issues to address for multistakeholders. These in­clude plan and patient affordability; the role of drug therapy re­bates vs no-rebates models; the strategic use of PAs vs current PA practices that yield few denials; and patient assistance programs (PAPs) funded by manufacturers. To date, manufacturers have shown an inability to work toward change in a market landscape without rebates. In addition, hospitals and large specialty medi­cal groups tend to be combative, rather than collaborative, re­garding 340B program changes during federal or state legislative sessions.

Lost in many public conversations among health care stake­holders is the total cost of care and what that means for the employer-sponsored plan or patient. The original purpose of commercial health insurance was primarily to provide a safety net for workers by protecting against income loss due to ill­ness, particularly hospital-based care.² While its initial focus was not on making health care cheaper, as the US business landscape changed, insurance gradually evolved to encompass medical and pharmacy expense coverage, along with cost-con­tainment processes. These included recruiting new employees, retaining existing employees, and being seen as an employee-friendly workplace.

At its core, commercial insurance is a form of private health insurance coverage that pays for individual patients’ medical and surgical expenses. Unlike government-sponsored insur­ance, commercial insurance is often offered through an em­ployer’s benefit package.³ It provides employees the option of obtaining coverage at a potentially lower cost than purchasing it independently. In addition, out-of-pocket employee costs may be lower or waived, depending on benefit coverage or spe­cific plan details provided by the employer.

In 2024, the year-over-year (YoY) cost of plans increased and is projected to continue rising at double-digit rates into 2025, with the same expected for 2026.^4,5 Health insurance costs today are increasing rapidly due to several factors. These include the rising cost of medical services, an aging workforce, medical inflation, insurance market consolidation, coverage strategies by employers, and residual effects of the COVID-19 pandemic. Additional factors that employers face in the con­tinuing cost trend dilemma include the overall economy, tar­iffs, government spending reductions through the Centers for Medicare & Medicaid Services (CMS), and cost-shifting to the employer market.

Ellen Kelsay, president and CEO of Business Group on Health (BGH), said that broad-based and sustained cost reduc­tion “must fundamentally come from the delivery system itself and is not isolated only to the commercial/employer market.”⁶

To do so will require changes and approaches that would em­power commercial employer plans over a sustainable, long-term period. The following are some current approaches to curb costs:

• Move toward value-based models that reward preventive care, ensuring long-term sustainability. Examples have varied widely—such as an employer vs commercial managed care third-party entity—and some models have evolved differently based on the perspective taken by the model. This area continues to evolve as cost concerns have escalated in 2025 for 2026 and beyond.
• Leverage artificial intelligence (AI). This early stage of predictive analytics requires significant program effort, costly data storage or analytic services, and has been limited in scope to highly controlled practices or specific rare diseases. Uncertainty in inputs within com­plex models or the lack of holistic pathways can limit AI’s decision-making value for preventative strategies, along with underwriting determinations or actuarial premium setting.
• Reduce catastrophic claims. This is another early-stage aspect of AI-based predictive analytics that is still limited in scope to highly controlled practices or specific rare diseases. Uncertainty in inputs within complex models or the lack of holistic pathways can limit decision-making value for preventative strategies and tactics.
• Improve the ability to track patients longitudinally over more than a single plan year or multiple employer plans. This will require overcoming challenges related to legal or regulatory compliance issues, such as HIPAA, the Health Information Technology for Economic and Clinical Health (HITECH) Act), and the Employee Retirement Income Security Act (ERISA), to name a few.
• Determine who takes on financial risk flows and responsibility for patient-insured or reinsured monies over longer time periods. For example, who has contract or plan risk in a product warranty? Employer centric entities need to advocate with manufacturers and/ or collaborate in the risk hub of patient-centered care.

Pathways and algorithms are integral to the evolving land­scape of health care delivery, serving as valuable tools to en­hance efficiency, accuracy, and patient outcomes. Pathways for clinical care stemming from physicians, surgeons, and ad­vanced practice providers help create and manage a patient’s treatment plan.

Such tools or platforms aim to standardize care processes by translating clinical practice guideline recommendations into actionable steps for delivering patient care. Ultimately, these efforts can assist in maximizing patient safety and clinical ef­ficiency to achieve optimal patient outcomes. Studies suggest that using clinical pathways can lead to improved clinical and economic outcomes, such as decreased length of hospital stay, fewer in-hospital complications, and improved professional services documentation.⁷

In the context of health care delivery, algorithms are com­putational processes designed to analyze data and support de­cision-making. They can range from simple decision trees to complex machine-learning models. Algorithms can be used at various stages of the patient journey.⁸

A pilot survey report published by the Journal of Clinical Pathways in October 2024 discussed real-world findings on who uses pathways and other platforms containing algorithms for patient care management.⁹ The results revealed that multiple clinicians, administrators, and other organizations responsible for benefits administration outside of direct clinical care utilize these tools. As such, there are many different uses, and there­fore value, for clinical pathways.

Nonetheless, clinical pathway tools need to evolve beyond their current limitations or areas of focus. Insights gained across the patient journey for holistic financial and optimal outcomes can deliver improved plan performance solutions that employ­ers, as plan sponsors, are seeking. By expanding the developer pool, health professionals can better document the use and po­tential of care pathways to deliver on the promise of enhanced patient outcomes.

As pathway developers move into real-world and real-time applications, they should find a more welcoming market re­sponse due to current health insurance underwriting trends. As a result, the marketplace could achieve the desired balance in executing clinically effective plan designs. Parallel and col­laborative efforts by stakeholders can help accelerate both the improvement and implementation of such effective tools or platforms across all health care market settings.

Balancing economic and clinical elements of a commercial health plan through a clinical effectiveness strategy for personalized medicine remains elusive and difficult to execute. There is a lack of alignment, collaboration, and shared goals among stakehold­ers in the US market.

Commercial insurance plans will continue to face a rising tide of double-digit claim cost trends, along with employee de­mands for better plan coverage. The unpredictability of claim occurrence, cost, and volume hampers commercial or second­ary insurance underwriting, further contributing to higher premiums and patient out-of-pocket outlays.

Whether employers will follow the Medicare coverage change is not certain. There also may be unintended adverse impact(s) from the Medicare pricing model for negotiated ther­apies proposed by the White House.

The question isn’t if or why employers will make chang­es to coverage for novel therapies, it’s who, how many, and how fast. Innovation in medical technologies and therapeutics is happening at an increasingly faster pace, followed by increasingly rapid marketing approvals by the US Food and Drug Administration (FDA).

If they act now, stakeholders who work with commercial employer plans will gain a competitive advantage in the evolv­ing commercial health care benefit plan landscape. The devel­opment and application of pathways or algorithm-driven tools will continue to expand and support coverage changes. Robust commercial employer plans, and a viable commercial, private-sector health care market, could perhaps influence government programs to follow the commercial lead in operating balanced, clinical effectiveness-driven programs.