A Debate about Navigating Health Benefit Costs and GLP-1 Dilemmas

[00:00:00] Welcome to the debate. So, imagine you are at a massive group dinner. 50 people, right? Sounds like a nightmare to organize, but go on. Right, exactly. So you have 50 people and you all agree beforehand to split the bill evenly. Now, that works perfectly fine when everyone is just ordering a standard entree, maybe a glass of water. But suddenly, three people at the table decide to start ordering $5,000 bottles of wine. Yeah, and the math breaks down pretty fast. Exactly. If you just keep splitting the check evenly, pretty soon the people who are just eating a side salad

[00:00:30] literally can't afford to eat at all. So they leave the table. And that is fundamentally exactly the mechanism of an insurance risk pool. It relies entirely on balance. And right now, as we sit here, that balance is completely shattering. I mean, when you look at the landscape of employer-sponsored health insurance today, the check has just become fundamentally unpayable for the average person sitting at that table. Precisely. Which brings us to the data.

[00:00:54] The latest employer health benefits survey from KFF, which just dropped this October 2026, has revealed what we can safely call a breaking point. I mean, the numbers are staggering. The average worker with family coverage is now paying $7,471 a year, just toward their premium. Right, out of their own paycheck. Yes. That is an explosive 9% jump from 2025 alone. And total family premiums of the combined costs that the employer and the employee pay together have hit $28,303.

[00:01:25] It's unbelievable. It is. The price of a new car every single year before a single doctor is even seen. And honestly, the forward-looking signals are incredibly grim. Employers are already projecting another 8% to 9% cost growth for 2027. And let's be totally clear about what is driving this. Yes, it's astronomical hospital prices, certainly. But it is overwhelmingly the explosive, frankly, unprecedented use of GLP-1 weight management drugs. We're talking about medications like Wagovi and Zetbound.

[00:01:53] We are just at this critical juncture where the baseline math simply does not work anymore. Right. Which brings us to the core tension we're examining today. When faced with this, frankly, unsustainable surge, how should organizations respond? Do we treat employee coverage as a governed, long-term clinical investment, one that requires structured access to high-value care, even when that care is expensive? Or must employers ruthlessly prioritize immediate affordability just to protect the collective financial health of the workforce pool?

[00:02:22] I take the position that blunt cost-shifting and specifically denying coverage for effective treatments is a false economy. It is a reactionary approach that damages both the long-term health of the workforce and the fundamental trust between an employer and its people. You know, health benefits are a workforce capability. They aren't just a liability to be minimized on a spreadsheet. Well, and I take the position that structural market realities make your approach basically impossible for the vast majority of companies.

[00:02:48] Specifically, we are dealing with high employee turnover and abysmally low treatment persistence for these new expensive drugs. So, underwriting high-cost, long-term therapies is mathematically irresponsible for an individual employer. Employers aren't public health institutions, right? They have a fiduciary duty to protect the broader pool from regressive, devastating premium spikes. Well, let's just get right into it then because I want to challenge this idea that trying to save money through these immediate, blunt cuts actually works.

[00:03:16] When leaders treat the annual insurance renewal as, you know, just a purely actuarial exercise, they usually resort to moving employees to high-deductible health plans or they unilaterally drop coverage for breakthrough medications. But we have empirical evidence showing this fails. Just look at the Brant-Goldberg study. They looked at a massive firm that moved all its employees to high-deductible plans. And the corporate theory there was if employees have to pay more out of pocket, they'll become savvy, price-conscious shoppers.

[00:03:44] They'll shop around for the best MRI price. But they don't do that. Exactly. They don't. The mechanism completely failed. The study showed that employees didn't become savvy shoppers at all. They simply panicked and cut back on all care indiscriminately. They skipped highly valuable preventative measures. They stopped taking their chronic disease medications. Because, you know, they couldn't differentiate between a low-value scan they didn't really need and a high-value screening that could literally save their life.

[00:04:09] So to me, the only sustainable path forward here is value-based insurance design or VBID, where we actively remove financial barriers to high-value care rather than just punishing the patient with deductibles. I mean, I understand the theory. I really do. But I come at it from a completely different angle because of the actual environment we operate in. The reality is that employers in the United States are individual economic entities. And they are operating in a highly volatile labor market.

[00:04:38] You mentioned GLP-1s earlier, which are really the catalyst for this whole 2026 crisis. The math for covering these therapies simply does not work for a self-funded employer. Walk me through why you think the math fails, though. Because clinically, these drugs are highly effective. Because of the behavioral reality of the patient and the labor market itself. Let's just look at the data from the 2025 Yurk study. It showed that only one in 12 commercially insured adults without diabetes remain on GLP-1 therapy after three years. One in 12. Wow. Right.

[00:05:08] They drop off because of gastrointestinal side effects, because of cost, or just supply shortages. Furthermore, the step one trial demonstrated the clinical mechanism of what happens when they do drop off. When patients stop taking semaglutide, they regain two-thirds of the lost weight within a year. The underlying biology just reasserts itself. Which I'd argue makes it a chronic medication, right? Just like a statin. But with a vastly different price tag and vastly different turnover.

[00:05:34] I mean, if I'm an employer, you're asking me to spend millions of dollars on a treatment that requires lifetime adherence. In a labor market where the average employee tenure is, what, maybe four years? And even if they stay at the company, the vast majority abandon the therapy anyway, totally erasing the clinical gains. So spending collective plan assets on that isn't building a workforce capability. It is a direct violation of the employer's fiduciary duty to keep baseline premiums affordable for the other 90% of the workforce who aren't taking the drug.

[00:06:03] Okay, I see why the dropout rate makes you hesitant. But let me give you a slightly different perspective on the GLP-1 dilemma. Because I view this as the ultimate test of an employer's strategy. You're focusing heavily on the upfront cost and the fact that people quit taking it. But let's look at the clinical reality for the people who genuinely need it. The SELECT trial showed a 20% reduction in major adverse cardiovascular events among adults with overweight or obesity and established cardiovascular disease.

[00:06:31] We are talking about physically preventing heart attacks and strokes. That is profound. Oh, sure. Nobody is denying the clinical efficacy for the right patient. The question is how a mid-sized employer actually pays for it. Well, you manage the cost through structured access, not by just banning the drug outright. You create friction. Let's look at Jefferson Health. They have 65,000 employees.

[00:06:53] Instead of just dropping coverage for GLP-1s, they required participation in diet and lifestyle programs before they would grant the prescription coverage. And explain to me why that works. Because by making employees go through a lifestyle program first, Jefferson created a natural clinical friction. It ensured that only the patients who truly needed it and were demonstrably committed to the clinical pathway actually got the expensive drug. It weeded out the casual users who just, you know, wanted to drop 10 pounds for a wedding.

[00:07:21] And by doing that, they saved $20 million and achieved over 90% active enrollment in their programs. That is how you govern an investment. Okay, I have to stop you right there because that is a compelling argument until you look at the structural differences between Jefferson Health and a standard company. Jefferson Health is a massive hospital system. They have dieticians, clinicians, and lifestyle programs inherently built into their corporate ecosystem. They basically own the supply chain.

[00:07:47] That is profoundly non-scalable for a normal mid-size manufacturer or like a local logistics company. You don't have to own a hospital to hire a vendor to run a prior authorization lifestyle program, though. But the administrative burden is massive. Let's look at organizations that don't own hospitals. The State Health Plan of North Carolina had to drop coverage entirely. Why? Because they projected that GLP-1s would cost them $170 million a year for a plan that was already running a massive deficit.

[00:08:16] Or look at the University of Missouri. They actually went to their employees and warned them that continuing GLP-1 coverage for weight loss would trigger an across-the-board 28% premium increase for every single employee on the plan. Yeah, 28% is a brutal reality check. I will absolutely admit that. That's devastating. You cannot ask a university administrative assistant who doesn't even use the drug to take a 28% pay cut just to fund a medication that, statistically, the recipient will abandon in 18 months anyway. Look, I hear the pain in that.

[00:08:45] But I'm just not convinced by that line of reasoning because you're treating workforce health like a short-term rental property. Wait, what do you mean? Think about how flippers treat houses. Why fix the foundation of a house if you're planning on selling it in a year, right? Just paint over their cracks and let the next guy deal with the collapse. If an employer looks at an obese, pre-diabetic employee and says, well, they'll probably change jobs in three years so the heart attack won't happen on my watch. That seems financially prudent in a vacuum.

[00:09:12] But if every employer adopts that short-term rental mindset, the entire talent pool is held to grades. Eventually you hire someone else's neglected employee and they hire yours and the systemic cost for everyone skyrockets. We are just trading sick people back and forth while the underlying disease progresses. Listen, I don't disagree that the systemic outcome is tragic. The American health care system is deeply flawed. But an individual employer cannot unilaterally solve a systemic public health crisis by bankrupting its own benefit plan.

[00:09:42] I mean, if you are the CFO of the University of Missouri, your duty is to the solvency of your specific plan. If you go bankrupt trying to fix the nation's foundation, no one gets coverage. But that is exactly why we have to shift the conversation from simply covering or denying a specific drug to how plans manage costs systemically. We need to go back to value-based insurance design. The problem isn't just that health care costs money. The problem is we are paying for the wrong things. And we're using blunt cost shifting to do it.

[00:10:11] Contrast the failure of high deductibles with, say, the Aetna trial involving patients discharged after a heart attack. Oh right, the post-myocardial infarction study? Exactly. Aetna completely eliminated co-payments for evidence-based cardiac medications for these patients. They just made the drugs totally free. Now, a traditional actuary would say, you can't do that. Our drug spend will go way up. And, well, it did. But what actually happened to the total cost? Because the drugs were free, adherence improved massively.

[00:10:41] Major vascular events plummeted. And it did not increase total health spending. The mechanism is really simple. The savings from avoiding just a handful of catastrophic emergency room visits and hospital readmissions entirely offset the cost of making the drugs free for everyone. That is the essence of value-based insurance design. We should be targeting low-value care with cost sharing and removing all barriers to high-value care. Look, I agree that the Aetna trial is a beautiful piece of health economics. In theory.

[00:11:11] And if employers operated in a completely transparent market, I would be entirely on your side. But I just don't buy that this is a scalable solution for the crisis we are facing right now in 2026 because of the mechanism of how drugs are actually bought and paid for in this country. Implementing value-based insurance design requires an employer to actually know what they are paying for a drug and to have the data to model the ROI. Which they actually should demand from their partners. But they don't have it.

[00:11:37] We have a massive structural lack of data transparency driven by PBMs or pharmacy benefit managers. For our listeners who aren't, you know, deeply entrenched in HR, a PBM is basically the middleman that negotiates drug prices between the manufacturer and the employer. But the mechanism of how they make money is highly problematic. They practice spread pricing and they keep undisclosed portions of the rebates they negotiate. The KFF data shows that only 49% of large firms say they even receive sufficient information about manufacturer rebates from their PBMs.

[00:12:07] Half of the largest employers in the country are flying entirely blind. They don't even know the net cost of the GLP-1 they are being asked to cover. Right. That is a massive failure of purchasing. Absolutely. Right. So until federal transparency laws are fully enforced and the gag clauses are truly eradicated from PBM contracts, blunt cost sharing, raising the deductible or raising the premium is literally the only lever an employer actually controls.

[00:12:32] You can't design a precision value based formulary when the middleman is actively hiding the prices from you and creating perverse incentives to favor higher priced drugs just to maximize their own rebate cut. I think that's a very fair criticism of the market, though I would frame the solution differently. The opacity of PBMs isn't an excuse to default to blunt cost shifting. It is an indictment of how passive employers have been as purchasers. If you don't have the data, you don't just throw your hands up, you demand it in the contract.

[00:13:00] You move to a transparent pass through PBM that charges a flat administrative fee. The answer to my vendor is hiding the data isn't, therefore I must punish my employees with a higher deductible. But let's look closely at who is actually being punished here because I want to talk about fiduciary duty and equity within the workforce. You continually frame dropping coverage as punishing the employee who needs a drug. I view it completely inversely. Let's look at the KFF data on small firms.

[00:13:26] Nearly a third of workers at small firms must pay more than half of the total family premium out of their own paycheck. Which is an enormous financial burden. It's crippling. A premium hike of, say, $1,000 a year is a minor annoyance to a C-suite executive. But it is a devastating financial blow to a frontline worker, a warehouse packer, or a janitor. Flat dollar premium contributions are inherently regressive. They hurt the lowest earners the most.

[00:13:51] Therefore, when an employer, like the University of Missouri, drops an extraordinarily expensive low persistence therapy to prevent a 28% premium hike, they are actively engaging in equity. They are protecting the lowest earners in their risk pool from subsidizing an unsustainable cost for a minority of people. See, I got to push back hard on this framing because it kind of creates this false dichotomy where the only way to save the warehouse worker is to deny clinical care to the diabetic or obese employee.

[00:14:21] You know, organizational psychologists have studied this dynamic for years. I mean, the employment relationship is built on an unwritten, implicit set of promises that's like a psychological contract. And health benefits are arguably the most salient emotional element of that contract. When you arbitrarily cut benefits or when you pit one group of employees against another by saying, well, we have to cut the obesity medication to save the janitor's premium, you profoundly break trust.

[00:14:48] Commitment drops, productivity stalls, and turnover intent spikes. So what is the alternative when the money simply isn't there? I mean, if you don't cut the benefit and you don't raise the premium on the warehouse worker, how do you balance the leisure? You can't print money. The true fiduciary response is fixing the purchasing side, not cutting the benefits side. Let me give you a prime example of real fiduciary courage. Look at the Montana State Employee Health Plan. Back around 2014, they were staring down a massive deficit heading toward insolvency. Sound familiar?

[00:15:18] But the administrator at the time, Marilyn Bartlett, didn't just strip benefits from the workers or hike their premiums to balance the ledger. She went after the hospitals. Right. She moved them to reference-based pricing. Exactly. And for those listening, reference-based pricing fundamentally flips how we pay for health care. Normally, hospitals have a charge master, a totally made-up list of incredibly high prices, and they offer the insurance company a fake discount off that inflated price. Montana said, we are done playing the discount game.

[00:15:46] From now on, we will look at what Medicare pays for a procedure because Medicare is based on the actual cost of care. We will pay you exactly 2.2 to 2.5 times the Medicare rate, period. Which is a highly aggressive negotiating tactic that made a lot of hospitals very angry. Oh, it is incredibly aggressive. But it worked. By tying their payments to a known, rational benchmark like Medicare, Montana saved up to $47.8 million over three years.

[00:16:12] They turned a projected deficit into a $112 million reserve. And here is the crucial part. They did it without taking a single clinical benefit away from their workers. That is what governing an investment looks like. You attack the price of the care. You attack the waste in the system. But you do not attack the clinical coverage of the patient. It is a phenomenal case study. And Bartlett deserves all the credit in the world. But we have to look at the mechanics of why she was able to pull that off in Montana.

[00:16:40] She had the immense leverage of a state employee health plan. Tens of thousands of covered lives in a state with a relatively small population. They were the biggest fish in the pond. The hospitals had to play ball because they literally couldn't afford to lose the entire state workforce. Leverage matters, yes. It's the only thing that matters in that negotiation. If a mid-sized logistics company with 500 employees tries to implement strict reference-based pricing of 2.2 times Medicare, the local consolidated hospital monopoly will simply refuse to see their patients.

[00:17:09] The hospital will say, fine, go somewhere else. And if the employee goes there anyway, the hospital will balance bill the employee for the remainder of the charge, driving the worker into bankruptcy. An average employer simply doesn't have the market power to dictate terms to a consolidated health system. I will concede that hospital consolidation is a massive barrier. It's why local monopolies are so dangerous. But that is exactly why employers need to band together in purchasing coalitions or, you know, utilize centers of excellence. Look at what Walmart did.

[00:17:38] They realized local hospitals were overcharging for uneven quality. So they contracted directly with high-quality providers nationally for procedures like joint replacements. They flew their employees to these centers of excellence, covered the travel, and waived the out-of-pocket costs entirely. And it saved them money. Not just money. And improved care mechanically. Not only did the cost per case drop by 15%, but the doctors at these top-tier centers determined that 20% of the patients Walmart sent them didn't even need the surgery in the first place.

[00:18:06] The local doctors were eager to cut, but the experts said physical therapy would work. So the quality went up, unnecessary care was eliminated, and cost robbed. Yes, and I highly commend programs like Walmart's. Centers of Excellence are fantastic. But I feel like we are drifting away from the urgent reality of the October 2026 data. The KFF survey shows a 9% jump in a single year. You're pointing to direct contracting, centers of excellence, and reference-based pricing.

[00:18:32] These are multi-year, highly complex, administratively heavy transformations that require huge HR teams. Employers are staring down an 8% to 9% cost trend for 2027 right now. While a midsize HR department is trying to figure out how to build a direct contract with a hospital, the GLP-1 utilization is doubling every 18 months and draining their cash reserves today. Underwriting fast-moving, high-cost therapies in an environment of high turnover is fundamentally unsustainable on a 12-month timeline.

[00:19:01] I completely see why you think the timeline demands drastic cuts. The fire is in the kitchen right now. But my counter to that is that reactive panic is exactly what got us into this mess. Treating health benefits as an annual budget nuisance, where every October we just shave off a prescription benefit or jack up the deductible to make the math work for another 12 months is a fundamental failure of leadership. The only way out is to stop looking at a 12-month window.

[00:19:27] Organizations must adopt multi-year strategies, implement fiduciary-level governance of their PBMs, and build structured clinical pathways like Jefferson Health. You have to make health investments sustainable without eroding the psychological contract with your workforce. Because if you just keep raising the deductible, you aren't managing health. You are just delaying disease until it becomes catastrophic.

[00:19:48] And my conclusion is that until systemic pricing and persistence issues are resolved, until GLP-1s prove a long-term ROI that actually accrues to the specific employer paying for them, and until PBMs are forced by federal law into total transparency, the absolute primary duty of an employer is to protect the collective affordability of the plan.

[00:20:10] It is noble to want to be a long-term clinical investor in your workforce, but if your plan goes insolvent, or if your lowest paid workers are forced to drop their coverage entirely because they can't afford the premium contributions, you have failed in your most basic fiduciary duty to your people. Well, we have covered a lot of complex ground today. And while we clearly disagree on the mechanism of the response, I think we have reached a vital point of convergence. The data from October 2026 signals a true breaking point.

[00:20:38] The era of passive auto-renew health benefits is definitively over. Absolutely. The days of simply accepting a spreadsheet from a broker and blindly passing a 9% increase onto the workforce without a second thought are dead. Employers can no longer rely on intermediaries to automatically manage their healthcare spend. Whether an organization takes your path of stringent, long-term value-based design, or my path of aggressive collective risk-pull protection, doing nothing is no longer an option. Exactly.

[00:21:08] It brings us right back to that dinner table. The check has gotten too large, the orders are completely out of balance, and the people drinking water are about to walk out. We have to redesign the mechanics of how we purchase health. The tradeoffs are incredibly complex, and I strongly encourage our listeners to look at the source material to see how these different strategies, strategies from clinical pathways that introduce friction to demanding pass-through PBM contracts, might apply to their own organizations.

[00:21:33] The math is unforgiving, but the choices leaders make right now determine whether the risk pool stands or falls over the next decade. Well said. We will leave the final judgment to you, the listener. If the check is unpayable, do you fundamentally change how you negotiate with the restaurant, or do you start restricting what the table is allowed to order? Thank you for joining us. Thank you.