UBS Health Benefits Survey: Elevance Health (ELV.US) leads, US employers prepare for rising healthcare costs

The Zhitong Finance App learned that in UBS's annual survey of employee benefit management agencies, Elevance Health (ELV.US) became the highest-rated US health insurance company, and the three major pharmaceutical benefit managers (PBM) seem to be in an advantageous position to withstand the impact caused by the surge in contract reviews in 2027.

UBS analyst A.J. Rice's team surveyed 166 benefit managers from companies with more than 100 employees. The survey covered insurers' competitive positions, anticipated medical and prescription drug costs, benefit priorities, and procurement plans for next year.

Elevance Health, which operates the Blue Cross Blue Shield (Blue Cross Blue Shield) program in 14 US states, had the highest overall score of 4.34 (out of 5). United Health (UNH.US) ranked second with 4.23 points, followed by Caesars Healthcare with 4.20 points.

Elevance is leading the way in both customer service and health care network categories. Aetna (Aetna), a subsidiary of CVS.US, scored the highest for nursing and disease management, while Caesar Healthcare ranked first for program support and digital tools.

Cigna (CI.US), which ranked first overall last year, declined slightly in the overall ranking this year, but it still maintains a leading position in the employer group with 501 to 5,000 employees.

The survey sends a positive signal to Elevance and UnitedHealth as employers prepare to reconsider an unusually large number of health plan contracts. Elevance's top ranking may help it secure new business, while UnitedHealth combines increased customer satisfaction with the lowest risk of customer re-tendering.

Seavis Health and Cigna is facing greater pressure in the insurance business, but its pharmaceutical benefits business is still competitive. From an industry perspective, the rapid rise in healthcare costs may drive up premiums, but it also poses risks if insurers misprice or fail to control claims.

More employers are publicly bidding contracts

About 77% of respondents said they plan to seek new proposals for all or most of the core health benefits in 2027. This is a sharp increase from 53% last year and 41% the year before.

Aetna and the Blue Cross Blue Shield program, which is not part of Elevance, face the highest risk of re-tendering, at 90%, followed by Cigna and Elevance. UnitedHealth has the lowest risk of re-tendering among major insurers.

Procurement standards have also changed. Cost and discounts are still top considerations, yet only 36% of respondents ranked them first, a sharp drop from 89% last year. Network coverage is second, followed by customer service and care management. Telemedicine and flexibility are becoming more important in the selection process.

Healthcare costs are rising at an accelerated pace

The employer expects the total cost of care for self-insured health insurance plans to rise 7.9% by 2027, up from 7% this year's forecast. The adjustment of the benefit plan (sometimes called a benefit “buyout”) is expected to reduce the increase by about 0.3 percentage points, and ultimately increase the net cost by about 7.5%.

Employees of self-insured employers are expected to pay 5.8% more in premiums and out-of-pocket expenses next year. Fully insured employers expect employee premiums to rise by an average of 5.5%, lower than the 8.3% increase predicted in the previous survey.

GLP-1 obesity treatment was listed as the biggest contributor to the increase in health care costs, followed by rising prices for medical services. Specialty medicines and extremely expensive patients remain important sources of cost pressure.

Large drug benefit management agencies still maintain their advantage

Competition among drug benefit managers (PBM) is intensifying, and 92% of respondents said their PBM contracts will expire in 2027. About 65% of respondents plan to issue a tender, which is more than double that of 30% last year.

Despite this, the three major pharmaceutical benefit management companies maintain favorable competitive positions. CVS Caremarketers, Cigna's Express Scripts, and UnitedHealth's Optum Rx face relatively low competitive bidding risks, and are the three companies most likely to improve their market position in 2027.

Cost management remains the most important factor when choosing a PBM. Transparency rose to second place, along with specialty drug management, while the importance of rebates declined sharply. Only 11% of respondents listed rebates as their main consideration, down from 37% last year.

The employer expects the cost of prescription drugs to rise 5.6% in 2027 and is estimated to be 5.4% this year.

Significant expansion of GLP-1 coverage

The survey found that currently 91% of employers will provide employees with medical insurance for novel obesity drugs, up from 52% last year. However, most employers have restrictions on health insurance coverage, including prior approval requirements and minimum body mass index thresholds.

UBS estimates that 19.1% of insured employees and their families use GLP-1 medications to treat obesity. Respondents expect this percentage to rise to 20.6% next year.

Weight management and mental health care are becoming the biggest areas of increase in employee welfare spending. Approximately 55% of employers expect to increase their budgets in these two categories, reflecting the growing economic and clinical importance of obesity treatment and behavioral health services.