Cancer Care Costs Surge for Group Health Plans

As cancer rates rise among working adults, treatment has become one of the fastest-rising expenses in employer-sponsored health plans, according to a new survey.

The survey by the International Foundation of Employee Benefit Plans (IFEBP) found that 86% of employers have seen their cancer care spending increase over the past year, with a median rise of 11%, making it one of the most significant contributors to overall health care cost growth.

As more employees get diagnosed with cancer, which in turn increases the cost of care for employers, they are increasingly turning to strategies that direct plan members to high-quality, cost-efficient providers and care facilities.

What’s driving the trend

Employers report that cancer-related costs are increasing due to a mix of:

Expensive specialty drugs — Many of the newest cancer drugs can cost $20,000 to $40,000 per month, while gene and cell therapies can top $1 million per course. Even with negotiated network discounts, the compounding cost of these treatments is straining plan budgets.

New treatment technologies — New high-cost therapies like immunotherapies and gene-based treatments are regularly coming on line.

A higher number of working-age adults being diagnosed with cancer — New cancer diagnoses are expected to exceed 2 million cases in 2025, with rising rates among women under 50 and cancers such as colorectal, breast and cervical appearing more often in younger age groups.

More people are surviving cancer — Employees and their dependents are entering treatment phases earlier and remaining in survivorship programs longer, adding sustained costs for employers.

How employers are responding

Employers are increasingly turning to steerage techniques that direct plan members to high-quality, cost-efficient providers and care pathways. According to IFEBP, the most common approaches include:

• Nurse navigators (63%) to help employees coordinate complex care.
• Second-opinion programs (58%) to validate treatment plans.
• Centers of excellence (42%), which offer bundled, value-based pricing.
• Treatment center networks (24%) and virtual care clinic vendors (18%).
• Value-based contracts (17%) and point-of-care testing (15%).

Among employers using these strategies, the primary goals are:

• Improving outcomes (66%),
• Offering personalized support (59%) and
• Negotiating lower prices (33%).

Nearly a third is experimenting with alternative payment models such as shared-savings or bundled-rate arrangements that tie reimbursement to results rather than the volume of care.

Prevention and early detection

Experts say early detection offers the greatest potential to control both costs and outcomes. However, only about half of employees receive annual preventive care, and a significant portion of catastrophic cancer claims is linked to individuals who skipped routine screenings.

Employers can help by:

• Promoting annual preventive exams and age-appropriate cancer screenings.
• Covering or incentivizing genetic and biomarker testing for at-risk employees.
• Incorporating AI-assisted diagnostics and at-home testing options for early detection.
• Providing educational campaigns on modifiable risk factors such as smoking, obesity and inactivity.

To manage this, benefit professionals are urged to take a comprehensive, life-cycle approach from prevention and early screening to treatment navigation and survivorship care. As Julie Stich, IFEBP vice president of content, noted, employers must “offer the most effective cancer care treatments while also exploring cost-control techniques.”