Employers are frustrated with having to eat healthcare costs that continue to rise for no sensible reason, and more are considering switching insurance or pharmacy benefits providers as a result, according to a new survey of major U.S. purchasers.
Changing vendors can be a formidable undertaking for employers, given the costs and efforts associated with switching. But employers are open to much more aggressive action to curb growing healthcare spending, according to the Purchaser Business Group on Health, a nonprofit coalition representing 40 of the largest healthcare purchasers in the U.S. that together spend more than $350 billion each year on coverage for 21 million workers and their families.
This year, 37% of the PBGH’s members have issued a “request for proposals” for medical benefits, meaning they’re shopping between insurance providers. The last time the PBGH surveyed its members on this issue, in 2024, just 12% of employers were conducting a medical RFP.
Meanwhile, 23% of the PBGH’s members are conducting an RFP for their pharmacy benefits, compared to 20% in 2024.
The PBGH’s findings and other recent surveys outline how employers, which provide health insurance to the majority of Americans, are increasingly fed up with the status quo. Employers’ health spending continues to tick up, driven by steep pharmaceutical costs, chronic health conditions, provider consolidation and other factors.
The cost of health benefits is expected to increase about 6% to 8% this year alone, according to various estimates. As a result, employers say they’re being forced to take steps like passing more costs along to their workers — a painful strategy given steep premiums and costly medical care are already driving Americans to forego needed care.
Employers are also zeroing in on their vendor relationships, including renegotiating contracts with their plan partners, finding new vendors to get lower pricing or canceling programs that their members don’t use.
In particular, employers are frustrated with their pharmacy benefits vendors, citing growing drug spending as a major budget stressor. A growing number of businesses are turning away from legacy pharmacy benefits managers like CVS’ Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx, citing hidden fees, self-dealing and complex black box contracts that health insurers and employers say leave them in the dark about where their money is going.
That’s spurring more employers to consider alternative arrangements — whether that’s contracting with so-called “transparent” PBMs, which are paid a flat administrative fee for their services or outsourcing various pharmacy benefits functions to different vendors.
Already, 27% of the PBGH’s members are using a ‘non-traditional’ PBM, the group said. That compares to just 16% in 2024.
“Employers are taking their fiduciary obligations seriously, innovating their procurement strategies and seeking aligned partners that are truly interested in working to address employer needs, not just to maximize their own profits,” Michael Costello, a PBGH board member and a strategy director for renewable energy company NextEra Energy, said in a statement.
After affordability, the PBGH’s members said they were most concerned about data and transparency. Employers are on the hunt for clearer information about pricing for healthcare procedures and other insights to help them find new ways to save money, according to the survey.
Congress and the Trump administration have also zeroed in on transparency as one potential avenue for lowering healthcare costs, including in pharmacy benefits. Lawmakers folded in new PBM disclosure requirements into government funding legislation earlier this year, while President Donald Trump has made greater price transparency a key pillar of his health affordability agenda.
