Brown & Brown, Inc. (BRO) Earnings Call Transcript & Summary

Okay. Let's get started. Hello, everyone, and welcome to today's webinar about the results from our inaugural Brown & Brown Employer Health and Benefits Strategy Survey 2025. My name is Bruce Lee, and I'm part of the marketing team here at Brown & Brown. So before we start today's proceedings, just a few housekeeping points. We respect your time, so we'll do our best to keep this webinar to a 1-hour time frame, top of the hour. We will save some time at the end for Q&A. [Operator Instructions] Note that your camera and mic are both disabled for the length of this webinar. This webinar is being recorded and will be posted on the Brown & Brown website, bbrown.com, and a replay link will also be e-mailed to all registrants. Okay. So now we have the housekeeping details out of the way. I'd like you to introduce our first presenter today, Chana Bieker. Chana, over to you on the next slide, please.

Fantastic. Well, welcome, everyone. Thank you all so much for joining us today. We're genuinely excited to host everyone. And as Bruce shared, we're thrilled to unveil the key insights from our inaugural survey. Today, we're going to be exploring the emerging health and welfare benefit strategies that are shaping the future and how they can help you attract and retain top talent, manage costs and better meet the evolving diverse needs of your workforce. To talk about our presenters today, if you've ever come across Brown & Brown's story or explored our customer-focused solutions, we move with the pace of the business and most of the time, even faster. Our mission, our vision and values come to life and simple but powerful belief. Business does not stand still and neither do we. Our strength is in our people, people who lead with trust and resilience, grit and commitment to real teamwork to deliver our customers every day. I'm genuinely excited to be here with 2 of my fellow consulting thought leaders, Laura Birkel and Chris Kardos as we unpack the key findings from our survey and more importantly, explore what they mean for all of us. And before we dive in, let me do a quick introduction to who we are and what we bring to the table. I'm Chana Bieker. I'm the national account leader for our large employer practice in Dallas. I've been in consulting space for over 20 years, partnering with HR leaders across all types of industries. I'm truly passionate about advancing total health equity and helping organizations design smart people-first benefit strategies that balance employee well-being, cost management that creates long-term financial stability. Laura Birkel, our national pharmacy leader here. She's been deep in the pharmacy benefits world for nearly 2 decades, and her expertise spans from everything in pharmacy strategy, vendor management, PBM contract negotiations to cost management and auditing. She and her team are the go-to when it comes to making pharmacy work smarter, most cost effective and overall PBM strategy development. Chris Kardos is our managing partner out of our Southborough office with over 25 years of expertise in advising HR and finance leaders on total benefit strategies across many industries. His sweet spot, I will say though, designing innovative health plans, building custom provider networks and measuring the real impact of clinical solutions. The 3 of us are excited to spend the next hour with you digging into trends, strategies and the practical takeaways that can bring back to your teams. Take a look at the agenda that's coming up. Next slide. Because what did the webinar without an agenda. Everyone loves a good agenda. So here's what we have in store. We'll start with a quick walk-through of the survey. What we asked, who we asked and why it matters, and this sets the stage for real-world challenges that we're going to impact together today. The competition for talent is fierce. Employers are telling us what they're feeling the pressures about. We'll dig into strategies they're using to stand out and the challenges they continue to face. The eternal balancing act of cost control. They shared their worries about rising medical pharmacy and the infamous GLP-1 costs, yes, of course, and balancing those pressures without cutting valuable benefits. We'll explore leading organizations and what they're evaluating and their ways of currently having more creative control spend without losing sight of employee well-being. One size does not fit all, and that's becoming a real challenge. Employers are trying to navigate the increasing demand for personalized inclusive benefits that meet a wide range of their employees' life stages, family dynamic and health needs. And we'll wrap up with actionable takeaways to help you turn these insights into impact. And of course, as Bruce shared, we'll save time at the end for your questions, so keep them coming in throughout the session. Let's talk about the survey. These insights come from more than 760 of your fellow U.S. employers from every region, industry and size, all with at least 200 U.S.-based employees. The survey explores key strategic challenges, opportunities employers face in managing their health and benefits plan, and it's not just theory. It's not what's trendy in programs that insurance companies or vendors are trying to influence. This is your peers that are actively working through these problems, these challenges and creative ways right now, just like you are. We collected responses between October 24 through December 6, and the survey provides a robust data set with a 4% margin of error. So let's get started in the top challenges. One of the most consistent concerns we hear regardless of the company size, industry or region is the ongoing challenge of managing human capital from the top down across all roles. Employers today are still trying to solve the same complex puzzle. How do we design benefits that attract and retain talent while keeping our costs under control and meeting diverse needs of employees all at the same time. This isn't a new issue. We all know this, but it continues to be front and center and a theme across the broader market each year. And based on our survey results, we all know it's not going anywhere anytime soon. In the center of the slide, the word Cloud highlights key themes from our survey respondents. And as you glance over these, surrounding it, you will see direct quotes from employers sharing their most pressing challenges in their very own words. I'm sure many of these sound familiar to all of you listening in today and probably guessing you said 1 or 2 of these yourself. Rising medical costs, still a major pressure point, balancing cost and competitiveness, tougher than ever, supporting growing mental health needs, absolutely on the rise, navigating complex regulatory changes, there's never a dull moment and the party no one wants to invite to, let's be honest. And if that's not enough, the generational balancing act that is adding a whole other layer of complexity, many employers supporting Gen Z-ers with early career expectations or strong focus in well-being and flexibility and purpose. The sandwich generation of the Gen X, juggling work, caring for aging parents, still raising a family and managing their own long-term health needs to baby boomers working longer than ever. Up next, we're going to focus on the key takeaways from the survey. No surprise here. Employers ranked attracting and retaining top talent as their #1 priority. But the good news is the overwhelming majority also told us that having the best or at least highly competitive benefits is absolutely critical to staying ahead of competition. Right behind talent in the race for attention is cost control. Employers rank managing costs as their most urgent focus for both future and current state health and well-being strategies. It's consistently landing in every top 3 priority that we've all seen for quite some time. And newer is our meeting diverse employee needs. Evolving needs of today's workforce, we know everyone is concerned about. Employers are getting creative, whether it's through unique programs, the funding models or actively exploring ways to close benefit gaps as employees' expectations and their specific lifestyles continue to shift. Next slide. As we dive into the top employer priorities from this survey, we're going to highlight some key differentiators between the market segments. For context, we say that the middle market, we're talking about employers between 200 to 2,000 employees. And for large market, it refers to 2,000 or more employees. And what you'll see on this slide are areas where responses for each group that landed 3% or more above the overall survey average, helping us spot out where the strategies and priorities really start to shift between these 2 markets. If you look to the left, the middle market trends, benefits are top concern for both the employer and employee. Middle market employers are more likely to say they're not sure, and that's okay. When it comes to pharmacy formulary design, pharmacy utilization management programs, well-being design or fertility coverage benefits. And they're also less likely to partner with stand-alone fertility or family formation vendors. To the right-hand side, our large market trend employers are actively planning for significant or moderate benefit changes this year, and that was across the board and more likely to be exploring plan changes around all benefit categories and provisions as well. They tend to offer a broader mix of benefits like health assessments, biometric screenings, even flu shots that still exist today with some of our employers that responded and lifestyle weight management program support. They're also more likely to dive deep into chronic condition-specific cost drivers with more flexible and intentional solutions to better manage overall health care spend. And yes, they're more likely to cover GLP-1s for weight loss, which, let's be honest, again, still remains one of the top hottest topics in the room today, and we look forward to hearing from Laura when she walks us through what's happening in that space here shortly. So let's dig into winning the talent game. The headline here, hope remains. On a scale from not important at all to extremely important, we ask employers to rank the significance of their employee health benefits package. Notably, all employers consider health benefits at least somewhat important with 91% rating as very or extremely important. So yes, and despite the challenges that we all are incurring, there is still optimism and a real commitment in this space. So kudos to you all for still staying ahead of it. Employers are genuinely wanting to do right by their people, and that came through strongly in this survey. Let's check out priorities. This chart gives us a clear view of what's driving employer benefit strategies right now. We've got the fantastic Chris Kardos on deck to take us deeper into several of these focus areas, which has a lot of great complementary expertise from Laura as well coming up shortly in our next segment. but understandably so, there is a lot here. So we're going to break it down. winning the talent game, following talent, controlling employee health plan costs. And the employee health plan cost isn't just a big picture spend. It's about the affordability for employees. That means their premiums coming out of their paycheck and their out-of-pocket costs when they actually use their benefits. controlling organization's health plan costs. We're talking about everything the company is on the hook for, plan administration, overhead, premium contributions, claims costs, file integrations, the whole big picture from the employer side. Beyond cost, workforce engagement, productivity and culture follow close behind. Employers are focused on boosting employee engagement and well-being, advancing DEIB initiatives, improving benefits communication to really connect with the literacy of their ever-changing demographic and the spectrum that it covers and considering retirement program updates. Lower on the list for now. And we want to say for now, fiduciary responsibility and health care innovation, that's interesting. And it was interesting to us how low it was on the priority and concerning. It's the financial and fiduciary and partnering with the right health care innovators ranking lower on the priority list that gave us a moment to pause. However, given the timing of the survey, we were already in the midst of several public lawsuits underway, raising big questions about employers' fiduciary roles and their health plan decisions and the partners that they're partnering with to make sure that they're staying ahead of that and doing what's right. So while it may not be one of the top of mind during this survey window, all of us currently and can expect that this is quickly on their eyes, and it is crucial and important as legal scrutiny grows. Let's get into attracting top talent. Employers are making a number of investments in their benefits package. They're focused on expanding provider access and improving behavioral and mental health care quality with many considering centers of excellence to enhance the mental health support space and resources to meet them where they're at. Beyond cost concerns, all person well-being is a top priority in health and well-being initiatives. 42% of employers currently partner with or plan to partner with a fertility vendor this year alone, with 20% considering a stand-alone fertility vendor partnership for 2026. This also included family forming as well. Of the employers covering fertility, 42% offer the basic coverage, including testing, treatment and lower-cost drug therapies. And nearly 25% provide comprehensive coverage, including IVF, egg freezing, varying from sizable to no lifetime maximums. Leaves, let's talk about it. There's one of these moments where we really wish we could see everyone's reactions on camera because leave policies always spark some strong feelings and facial expressions when we talk about this. But it's imperative. 49% of employers offer paid parental leave beyond statutory and state requirements and 23% indicated that they were planning to implement this benefit in 2025. And when we look at the cost, it's eye-opening. According to the Bureau of Labor Statistics, paid leave accounts for about 7.9% of total compensation. Then you consider the indirect costs, things like unpaid leave, overtime coverage, temporary hiring can be 4 to 10x higher that amount. So while we leave and we feel that this is a big expense on paper, not offering it or not offering it well, the key is well and compliant and right will cost you more in the long run. To wrap this slide up, disability coverage, 54% enhanced their disability coverage in 2025 this year and 35% are considering enhancements for 2026. Up next, we'll get into the story behind the numbers as we take a deeper dive into cost control. So I'll hand it over to Chris and Laura to walk us through what's really driving the conversation.

All right. Well, thank you, Chana. Really appreciate your passion and positive energy. I want to spend a few minutes talking with you all about our cost control. So Chana talked a little bit about all the investments that employers continue to make in a number of areas to generate valuable benefits for their employees and to help employees be successful in the workplace. Unfortunately, we are in an environment where we are seeing trends that are so elevated. We haven't seen anything like this in about 20 years. And so employers are having to balance all of the investments that they have made over the last several years and continue to make and want to make with some prudent cost management. So let's dive a little bit deeper and look at what some of the priorities have been from our survey respondents. So if we take a look at employer health and well-being initiatives. So we ask respondents, what are your highest priorities in addressing your health and well-being initiatives for 2025. And frankly, the top priority was quite shocking to us. 2/3 of respondents basically are concerned about the organizational cost to continue to provide the benefits that they are offering. So this is a real question of sustainability and affordability. So how can we sustain the investments we've made as an organization and how can we continue to offer benefits that are aligned with our business strategy and our goals. That was really a surprise to us to see that as the highest priority, and it is a reflection of the elevated trend environment that we find ourselves in. Affordability to employees, almost just as important. I think affordability has always been a big concern for plan sponsors across the country. And the high trends that we are seeing are forcing a lot of plan sponsors to make some very tough choices, and we'll see some of that when we get to the next slide. When we think about emotional well-being and physical well-being, those are 2 areas where we continue to see a lot of investment and our plan sponsors don't want to take steps back in those areas. So those are -- those continue to be high priorities, no surprises there. And then when we think about navigation and support and communication, again, those are areas where when we think about how complex the health care system is and how complex the health benefits are continuing to provide resources and in some cases, navigation and support to make smart health care decisions at times in folks' lives where that is difficult to do, that is still a very top priority for employers. Let's go to the next slide. Now when we think about those trade-offs, we think about benefit changes. And our survey showed that most employers, especially those that are on the larger side, are anticipating making some substantial changes to their benefits programs for 2026 and probably beyond. We asked about a lot of different programs in the survey. So we asked about, obviously, medical and pharmacy, which is in front of you. We asked about other health care programs like dental and vision, disability, paid time off, retirement and HR technology, things like benefits administration, which has been a big focus for employers over the last many years. None of those things made this top priority list except for you guessed it, medical and pharmacy and of course, related to that, well-being programs. So given the environment that we find ourselves in with trends being as high as they are, about 3/4 of survey respondents are expecting to make substantial changes to their plan designs. So when we think about out-of-pocket costs, when employees and their families get services, deductibles, copayments, co-insurance. Unfortunately, we will probably see those ratcheted up based on the respondents here. When we think about medical contributions, so premium subsidies that employers make and the premium contributions that employees pay out of their paycheck, we see 3 out of 4 looking to make adjustments to that, to their subsidies. A lot of employers have made a lot of investments in well-being. So not only offering well-being programs that help keep employees healthy and improve their health, but also financial incentives to help give employees a lift in terms of being more invested in maintaining their health. Those are very expensive. And our survey responses show that employers may be looking to curtail or scale back slightly on some of the well-being program designs. And some of that may be a function of increased measurement and really kind of keeping tabs on how well are these programs working? Are they generating value? Are they making people healthier? And in cases where the jury is still out, I think some employers are, given the difficult financial environment, making some trade-offs around continuing to invest in all of those areas. We're going to talk a lot more about pharmacy in the coming minutes, but pharmacy plan design, again, when we think about copayments and coinsurance for pharmaceuticals, that is also a high priority for employers. And then on voluntary benefits, I don't want to take us too far off track, but we've seen a lot of innovation in the supplemental health space with employers offering these plans as a voluntary offering for employers -- employees to buy if they would like. This helps offset, in many cases, their out-of-pocket costs when they go to get services. We've seen a lot of integrating of these programs with the underlying medical plans. So the idea of having these plans work more aligned with the medical coverage and making them easier to use and take advantage of for employees, I think employers are seeing an opportunity to find the right types of programs and look for those integrations where possible so that they can generate more value for employees who actually purchase those programs. Let's go to the next slide. So we talked a little bit about cost sharing and plan design changes and the tough decisions that employers have to make. Aside from those types of trade-offs, employers are always looking for ways to reduce their costs and let's be honest, get a better deal, right? When we think about the results of the question for the survey here, we see that 4 out of 5 employers are really going to double down on making sure that they have best-in-class contracts with their vendors. So conducting a medical or pharmacy RFP, very, very high on the list. I'll talk about stop-loss in a second. But Chana mentioned the increased focus on fiduciary responsibility. We are seeing a lot of activity in the audit space for medical and pharmacy as well as clinical audits, which are another way of really just saying getting under the hood of the clinical programs that the medical carriers are offering plan sponsors, making sure that those programs are delivering value. So that is a high priority in the cost saving -- in the bucket of areas for cost savings. Stop-loss. So many large employers that haven't ever purchased stop-loss or had stop-loss in their toolbox are now looking at stop-loss as a way to manage the volatility and cost increases in their programs. And why is that? Well, it's because we're seeing such a proliferation of large and catastrophic claims in a variety of different clinical areas. And we are also seeing a proliferation of multimillion-dollar treatments, especially in the area of gene therapy, which are creating a level of cost volatility that even very large employers have never really had to grapple with until now. So clearly, our survey results show that many employers are evaluating their stop-loss strategy. And if they don't have stop-loss, maybe they're looking to add it. And if they have it, is it really the right design and do they have the right strategy in place. Cost transparency, we could spend an hour just talking about that. employers are always looking to try to find a way to get their employees to go to the highest quality providers and providers that provide health care that is efficient. And with the continued advancements in the machine readable files that carriers are now required to provide or the MRFs as we call them, we're seeing quite a bit of innovation to take that data and make something more useful out of it. And I think employers are realizing that there are -- there is more opportunity for them to take advantage of these new tools and also find ways to make some of that information available to their employees so that they can make better decisions for themselves and their families. And then finally, virtual primary care. we all know about the health care access issues in this country. Virtual primary care is one way to improve access at the primary care level. And with all of the partnerships that the carriers have put in place with a variety of virtual primary providers like Carbon and Firefly. There are many, many of them. I think that -- those innovations have allowed plan sponsors to really take advantage of virtual primary care and offer expanded options to employees. So I think that's certainly reflected in our survey results. Let's go to the next slide. So with -- when we think about looking at the plans and managing costs and looking for opportunities and innovating, you need data. And we wanted to ask our survey respondents, are you looking at this stuff? Are you keeping tabs on what's going on with your data? And the overwhelming answer was yes. Almost 4 and 5 survey respondents basically are telling us, hey, we are constantly monitoring our data. We're analyzing our data. We're trying to understand what's driving our cost, we're trying to understand what's driving the health status of our employees so that we can do more. We can offer more programs and services and support. So you can see on the left, many employers are monitoring their data either through a data warehouse or close partnership with their carriers. And on the right, you can see, and many of you won't be surprised by the top drivers here, but you can see that our respondents are aware of where their costs are coming from. Cancer, diabetes, cardiovascular, musculoskeletal, those are the top 4. I did want to kind of triangulate those with the data that we're seeing from our own data warehouse where we have many of our clients' data in there. And in taking a look at our data, we show a very similar story. So cancer is also the top driver for our clients that are in our data warehouse. Diabetes is a top driver as well. Digestive also showed up a little bit higher than the survey respondents. And then another area that I think we're seeing increasingly drive a lot of cost is in the dermatology area. So not quite represented here on the slide so much, but we're seeing that certainly in our data. And a lot of it has to do not so much with the traditional medical claim spend, but more what's going on, on the pharmacy side with some very, very expensive pharmaceuticals that are driving, in some cases, a 6-figure annual cost per patient. And pharmacy, again, is an area that employers are very focused on. And since we're on that topic and our next slide is focused on some of the pharmacy perspectives that we wanted to glean from our survey respondents, I'm going to turn it over to Laura to cover some of what we learned.

Thanks, Chris. So I'll be covering one slide on the pharmacy results from the employer health and benefit survey, and then I'll be diving into a recent pulse survey that our team performed within our own Brown & Brown customers that focused on GLP-1 coverage and strategies. So for our employer health and benefits survey, the first section calls out specific pharmacy plan changes that employers are considering. Those that rose to the top for consideration are moving to more restrictive formularies, most commonly those that balance both access to medications as well as rebate amounts. In addition to that, plans are considering putting more restrictive utilization management programs on therapies within those formularies. We're also seeing rising interest in implementing programs that capture cash pay solutions at the pharmacy. So this is where members can within their benefit, capture mostly deeper generic discounts like those that are offered through programs like GoodRx of the industry. Plans are only looking at making modest increases to cost sharing. And then finally, due to recent and continual pipeline, biosimilar strategies are under consideration. These are things like restrictions, formulary placement and cost sharing on those therapies. As we looked across the mid-market and large market responses, there was overall consistency. However, in the mid-market, one of the concerns that rose to the top was just having uncertainty around their pharmacy strategy, which I think is a good segue to the content on the right-hand side of the page. This is where employers voice concerns across the pharmacy ecosystem. They cited challenges like the possible regulatory and legislative impacts. This is becoming extremely complicated for employers to navigate both on a federal and state level. And it's not just the cost impacts, but we're seeing employers struggle with the compliance element of it, too. There's also a concern with the lack of transparency. But certainly, due to market pressures, it's really pushing the PBMs to explore new financial models that we're evaluating on behalf of our customers. There is also just concern around general rising pharmacy trends that leads to concerns around affordability for both employer and employees. The top concern being those high-cost drugs that Chris was referring to earlier, but it's not just high-cost drugs or gene therapies, it's also maintenance drugs as well that were noted. So changing gears to GLP-1s, I'll first note some trends from the employee benefit survey before I switch gears to our recent Pulse survey. So 70% of employers are covering GLP-1s for weight loss. And of those, 78% have restrictions in place to manage those costs and the clinical aspects of the drugs. They may range from standard formulary restrictions to site of care restrictions. As Chana noted earlier, there was a key differentiator though in respondents from mid-market to large market employers. So where I noted 70% earlier that cover for weight loss, that's 64% in the mid-market and 78% for large employers. And of those that are covering, 85% of employers are considering additional restrictions for 2026. And that's why moving to the next slide, we'll go deeper into those considerations. This is where we have -- if you don't mind advancing to the next slide. Can you advance to the next slide? Thank you. This is where we have the results from our recent Pulse survey that was conducted within the Brown & Brown customers. We performed this just due to the changes we've been seeing most recently within the GLP-1 landscape and really the continued interest in focusing around strategies in this category as employers are making decisions for 2026. The survey just closed last Friday, we received 450 total responses and of those 237 were self- or level funded plan sponsors. Within those self-infunded employers that are currently covering GLP-1s for weight loss, 31% are considering either stopping coverage or are unsure about the continuation of coverage over the next 12 to 24 months. For those that have restrictions in place around GLP-1 use, the majority cover require prior authorization or they have criteria in place that go beyond the FDA guidelines. The more less prevalent tactics or those that are under consideration include limiting coverage to specific duration or period of time or the number of fills of GLP-1s, also limiting to a specific prescriber type or a sole prescriber. And then finally, considering lifetime maximums on GLP-1 therapies. With that, I will turn it back to Chana.

Awesome. Thank you, Laura. Thank you, Chris. we will round out with our third key takeaway, meeting diverse employee needs. So we'll get into the current and desired future approach here. As we've been sharing in many facets of our conversation today, the workforce is more diverse than ever and lifestyle needs and unique needs that employers are being tasked with and also the administration burden that they go underway is very difficult. It's not a one size fits all, and they're focusing on strategies that deliver inclusive, holistic support, improved well-being, affordability and access to care, many things that Chris and Laura were mentioning throughout their prior slides. Just over 2/3 of employers expect even greater integration of their well-being in their future. Many were already addressing many of these aspects and multiple aspects of this in their health plan today. They're aiming to go even further, though, embedding total well-being into their complete total rewards philosophy, their organizational culture and DEIB efforts. So what we're seeing here is a real shift in mindset. We felt this, this isn't completely new. It could be new to some of us as far as the localization and some of the surveys you all have been doing throughout your business. So supporting the whole person across every life stage and demographic, again, not a nice to have. It is business imperative. So let's talk about the current health and well-being programs in our next slide. There's a lot to unpack here. I seem to be getting most of those today. But overall, to summarize, 50% of employers are currently offering a range of programs, particularly those you will see in the over 2,000 employee space. Key observations from this chart are that majority already offer foundational well-being programs and chronic condition management and prenatal and maternity programs. Traditional wellness initiatives like screenings and well-being challenges also remain widely adopted. Employers are actively expanding weight and lifestyle management and intentional chronic condition management programs, as Chris was talking about earlier as well, and advocacy and navigation solutions this year and years to come. Family formation and fertility programs, along with MSK solutions are gaining traction, suggesting an increased focus on specialized and high-cost areas of care. This is especially relevant in the MSK space and the programs and innovations that we're seeing and have been vetting and spending a lot of time in, often tie, as we know, for most businesses, whether it's office or it's in the field to [ worker's ] comp and disability claims. A smart investment here can reduce your health plan and workplace entry costs. Overall, this data shows employers are becoming more strategic, data-driven, as Chris was sharing earlier, about their investments in their program. And this focus is on scalability, cost effectiveness and measurable impact with data. As you should, employers want to see what works before expanding any further. Next slide. And wrapping up here, the workforce is evolving. Employers are actively offering or planning to offer a wide range of comprehensive services this year in 2025 and beyond. These come through specialized vendors or enhanced EAPs. For example, many are investing in EAP partnerships staffed with licensed mental health counselors at the forefront, moving beyond the traditional EAP models to better support employees' real-time mental health needs. And let's not forget the growing number of employees, again in this sandwich generation, those balancing care for aging and retiring parents and still raising families. It continues to be a broad and complex spectrum of needs, as you can see in this lifestyle support of services. And that brings us to the close of this hour and need to wrap things up and look ahead, I'll pass it back over to Chris for the big question, sir, what now?

All right. Thanks, Chana. I appreciate that. Well, only one more slide before we get to the Q&A. But we've talked a lot today about employer perspectives on a lot of different things that employers are looking to do, whether it's managing cost, continuing to invest in programs and frankly, manage a very difficult and complex health care and benefits environment. But we really wanted to get back to the essence of what as an employer, what are -- how are you looking to drive change in health care in your organization? And kind of waiting for the rest of this slide to come up here, we've got some additional stats. I'll fill them in. So we essentially said, look, we've got 3 types of employers here, the wait-and-see type, the wait and see, not sure. We need to make changes. We need good ideas, but we want our vendor partners and our consultants and our brokers to really kind of vet those programs, curate those solutions and kind of bring them to us so that we can evaluate them and see which ones fit best into our business priorities and cultural priorities. And that's that sort of dark blue, deferred to vendor partners. So we can see that the largest cohort of our survey respondents are really in that grouping. Now we do have quite a few innovators, right? We've got about 1/3 of -- a little bit more than 1/3 of survey respondents that said, "Hey, you know what, I need to take some risk here. I'm willing to drive change in my markets where I have employees. I'm willing to maybe pilot things, do some innovative things, maybe one-off custom things with the right vendors. I'm willing to experiment and make sure that I'm staying ahead of the curve. And so when you have a large cohort of employers like we surveyed, we're going to have folks all over the map. But what this data really shows us is virtually no one is sort of on the sidelines saying, well, I'm just going to keep doing what I'm doing, and I'm not going to really look for anything else. Every employer one way or another wants to build a better mousetrap wants to manage the cost pressures that we're all facing and wants to do right by their employees. So with that, I will turn it back to my colleague, Bruce, who will hopefully take some questions.

Thanks, Chris. Appreciate it. I do not have any questions submitted at this moment, but I'll pause, give it a second or a minute or 2. [Operator Instructions] I thought I would just prompt one question for Laura and the promise of biosimilars and are they -- are we ever going to see the biosimilars acting what we all thought would happen and try to bend that pharmacy trend a little bit.

Yes. We're actively monitoring that. And especially for the HUMIRA, that one came out the earliest versus STELARA, which was more recently. For those that made the early decision to exclude the originator products, we are seeing the cost impact of that. Now it will continue over time as additional competitors release biosimilar products. And we're monitoring the pipeline, but there are continual biosimilars being released. Are they as large of blockbusters as the originals as HUMIRA? No, but they are going to have cost impact, and it's something that we're continually monitoring in our data to be able to show that back to employers.

Great. Okay. I have a question here. This might be a tough one, but I think either Chana or Chris, probably Chana could take this one because I think probably more significant in your part of the country. Basically talking to the fact that physician availability and access is really in dire straits. What if anything can be done to get providers to rural areas or smaller states? Maybe that has a virtual tied to it, I'm not sure.

Yes, absolutely. We hear this quite often. As Chris was talking about earlier with our insurance providers and insurance companies expanding their horizons and their models to expand into virtual and digital care partnerships. they've got to get there. You do have a few of the, we'll say, the top 4 of the [indiscernible] that do have a great footprint in some of these rural parts and smaller states. However, there's a lot of work to be done. Many of us sit on councils with these insurance companies to give feedback and things that we're hearing and also the expansion of remote workers since COVID, and they're really branching out in these smaller places and the acquisition and M&A activity. So the biggest thing is going to be, please, please invest in your partnerships with your carriers on expansion of their virtual and digital care providers and to stay really attuned to what they have on the road map with expanding their provider contracts as they enhance and evaluate those each and every year.

Chris, anything -- I know you probably have deal with some New England customers in particular, where they're in fairly rural parts of upper New England. I'm wondering if you have any further thoughts.

Yes. I mean I think Chana's answers are spot on. I mean this is just a very difficult problem to solve, right? I mean this gets at the heart of really our health care delivery system and really the motivations for becoming a doctor. The economic incentives are aligned with specialty care and not so much primary care. I think what we are seeing in some areas, and some of this is rural as well as urban where we also have huge access issues in major urban areas is starting to see employers band together and offer near-site primary care where you can essentially do -- have hybrid models, which will obviously provide virtual care perhaps as a backbone because it's hard to get folks to move to rural areas, but to have some presence. And if employers can band together, and there are several companies that really focus on this area and can partner with the insurance carriers to sort of get those near-site places up and running and flowing through the claim system, I think we're going to see more of that. I think we're going to see more employer-to-employer partnerships to generate where possible, some additional primary care capabilities, infrastructure in those areas. But I really do think it has to be employers finding ways to collaborate, band together because it's very difficult to do it on your own.

Great. Thank you. Laura, then this one is squarely for you. Are tariffs expected to significantly impact the cost of drugs?

Many things within our political environment, I would say there's a lot of uncertainty as to what the impact will be, but we do share concerns along with our customers around what impact it will have on drug costs. There's just a little amount of detail shared about the intended purpose or the imposition of tariffs on the drugs themselves. We expect that it would have a more significant impact on generic drugs and on brand drugs. Moving facilities isn't necessarily a solution. So we're really in wait-and-see mode. But it is a concern because tariffs could worsen an already increasing concern around pharmacy spend.

Great. I'm not sure -- so either Chris or Chana, maybe you could weigh in on this. Hybrid policies, whole life or a life policy of any type combined with a long-term care rider inside the policy itself as a payroll deduction. Where do you see that type of product fitting in as far as marketability for the employer to consider offering?

Yes. Yes, this is Chris. I mean I can take that one first. That's actually -- we're actually seeing a lot of activity there. So a couple of things. The traditional long-term care market collapsed over the last 15 or 20 years due to the fact that it was not priced in a sustainable way. Those plans were very popular and many offered through employers in the '90s and early 2000s. That has been sort of replaced with what the person asking the question just alluded to, which is essentially a whole life policy or some sort of life insurance policy that has a rider on it where the policyholder can take advantage of the benefit to pay for long-term care expenses. And when you see some of the legislative activity that is afoot around the country, including what the long-term care program that was passed in Washington a few years ago, I think employers are looking at long-term care in general and saying this is a huge problem. It's a huge cost -- potential cost burden for employees. They want, in some cases, solutions, things that they can buy to help protect themselves. And also, maybe they can protect themselves with something that doesn't force them to be part of a state-run program that may not really provide the type of benefit that they're looking for. So I think employers are starting to offer these programs more and more as a way to provide employees with options and choice -- and in some cases, the opportunity to buy something that may hopefully exempt them from a state-based program that obviously is well intentioned, but in many cases, is kind of a blunt instrument, one size fits all and doesn't necessarily meet the needs of individual employees. So Chana, I don't know if you would add to that.

That was perfect. And it just rounds out what we saw more in the retention and differentiation of a competitive plan, especially again, as we were speaking about the aging family members and increasing caregiver responsibility demographics that we were talking about as far as where life stages are with individuals. Nothing else to add to. That was great, Chris. Thank you.

I mean a little bit of a commercial, but we have a group of colleagues that focuses on nothing but that, nothing but long-term care. And it's -- again, it's an area that where they have a ton of expertise and have been really very helpful with a lot of our employer clients who have been interested in offering a product just like that.

Okay. Great. Okay. I have a question here that I think is a very good one, although to clarify, we did not survey employees. Our survey was only of employers. But I'd like all 3 of you to give some I mean it's a very kind of all-encompassing question, but at the same time, I think it's a really good one that I'd like each one of you to weigh in just with a relatively brief response. According to the survey, where our employees seeing -- I think they mean employers or maybe employees seeing the biggest gaps between what they offer -- employers. Let me read that again. According to the survey, where are employers seeing the biggest gaps between what they offer and what their employees can afford to actually use, particularly in terms of out-of-pocket health care costs. How are they addressing that disconnect, which is an awesome question, but could probably be another 6-hour webinar. But if each one of you could maybe just give a quick thought on that because I think it's a really good question.

Yes, absolutely. That's great. We're seeing the biggest gaps have to do with supplemental benefits and some hybrid funding models. When we were talking about the different resources and tools and programs. Some of the funding models we see, specifically, for example, in the worksite space like your accident, critical illness and hospital indemnity, we see this a lot with hard to reach individuals as far as literacy, affordability, seasonal workers, part time, et cetera, whatever the industry may call for, but where employers can get creative around perhaps funding employer-paid accident plan, but the critical illness and hospital indemnity plans voluntary, lifestyle spending accounts, really gaining a lot of popularity and traction. while the surveys you see out there in the market, overall, I think there's less than 10% of national employers that actually offer that benefit. We have an extreme amount of those with our customer base here, and they have a -- it's a controlled budget benefit for the employer. And also it rounds out a huge variety and flexibility of spend and overall retention tools for employees. Offering virtual care, mental health care for free or a very limited cost to your employees, super important. That would be a great benefit. Chris, anything you'd like to add there, just to throw some stuff out while we have a little time.

Yes. I mean it's a great question. It's a tough one to answer quickly in the sense that employers are -- most plan sponsors are investing a ton in their benefits program. So again, it's a trade-off question. What are we doing? What are we not doing that we can do? Chana, you mentioned, in many cases, programs that are employee paid, but can be of very high value. In terms of employer paid, I think on the health care side, again, focusing on efficient types of care options that remove cost sharing where possible, virtual primary care and expanded preventive care and a lot of things that -- where there have been cost barriers to try to remove those. I think those are areas where employers feel like we should be doing that. It's going to cost us money. But at the end of the day, it's manageable, and it's probably going to get us more bang for the buck. I think I mentioned this briefly, but employers in environments like this tend to really start to look at their populations and say, how are my employees across the income scale being exposed to the costs associated with what I'm offering? And can I rebalance that a little bit. So when I think -- when we think about income-based pricing or programs that support lower paid employees, I think we're seeing more activity in those areas to try and mitigate some of the cost exposure because, again, it's not proportional, right, if you have a one-size-fits-all health care benefit program. So there's a lot of different things that employers can do. But in many cases, you're looking at some trade-offs and obviously some limits to what you can do because, again, the whole idea is sustainability, right?

I'll be quick because I know we only have 2 minutes left, but I would say in the pharmacy space, it, of course, comes down to specialty drug costs and also wanting to balance that with ensuring that there's adherence to those really important therapies. So oftentimes, employers are not necessarily using cost sharing to shift cost to the employees because they are concerned around adherence and taking those critical medications. So they're looking for solutions like manufacturer assistance or patient assistance programs or possibly evaluating differentiator PBMs that are willing to implement programs to curb specialty costs. But I would say most of the concern right now lies in differences that a patient might see in what their out-of-pocket costs would be, whether they're utilizing their insurance or some other sort of manufacturer assistance or mentioned before was those GoodRx programs. So I think employers are really looking for solutions to bring into their benefit where they can utilize those other dollars available or discounts available to really bridge that gap.

Wonderful. Well, that brings us right to 1:00. Next slide, Elissa. So thank you all very, very much. First of all, thank you to our speakers. You were wonderful, as always. And mostly thanks to all of you who joined us today. Like I said, the replay and the deck will be sent out to all registrants and the replay will be available on bbrown.com. Thank you, and have a wonderful rest of your day.