Where is the cost coming from? Unpacking the drivers of excess healthcare spend

As you analyze your organization’s healthcare spend, the biggest numbers—cancer, musculoskeletal (MSK) issues, and now the meteoric rise of GLP-1s—often feel like disparate line items. But if you look closer at the “why” behind the “what,” a singular, often invisible driver emerges: caregiving.

At Cleo, we’ve observed that caregiving isn’t just a “soft” benefit or a niche HR perk; it is the central hub of your healthcare claims. When employees are overwhelmed by caregiving responsibilities, their own health becomes the first casualty.

Here is an analysis of where the cost is actually coming from and how caregiving ties it all together.

1. The high cost of caregiver neglect

The top categories of excess spend—chronic conditions like heart disease and diabetes—are often symptoms of a larger problem. Family caregivers are more at risk for burnout and health problems because they notoriously put their own care last.

• The link: A caregiver managing an aging parent’s medication or a child’s specialized needs often skips their own preventative screenings.
• The spend: Our Family Health Index™ (FHI) analysis confirms this isn’t just a theory. High-risk caregivers (those with the highest strain and risk for burnout) incur 67% higher medical costs than their peers—averaging $1,000 PMPM compared to $600 for those with support.

2. The GLP-1 surge: More than just a weight loss trend

GLP-1 medications are currently one of the fastest-growing cost drivers for employers. While the clinical need is real, the demand can sometimes be fueled by the same caregiver neglect mentioned above.

• The link: If an employee is ignoring early diabetes signs or struggling with weight management, it may be because they are in survival mode. When you are juggling work and home, you don’t have the mental bandwidth for meal planning, sleep hygiene, or exercise.
• The spend: Without caregiving support to lower the burden and free up time, employees are more likely to lean on high-cost pharmaceutical interventions (like GLP-1s) to manage conditions that might have been mitigated by proactive, holistic health management.

3. Mental health and the burnout claim

Mental health claims are rarely isolated. They are frequently the byproduct of the sandwich generation being squeezed from both ends.

• The link: Caregivers are twice as likely to experience clinical levels of anxiety and depression. Because the job of caregiving never ends, these employees stay in a constant state of high cortisol.
• The data: According to our FHI findings, moving a caregiver from a “high risk” state to a “supported” state results in a 61% improvement in mental health scores and an average of 64 hours of productivity saved annually. That is over a week and a half of lost time recovered simply by providing the right care infrastructure.

4. The predictability gap in leaves of absence

Most employers view a Leave of Absence (LOA) as a one-time event, like maternity leave. However, a vast portion of FMLA and paid leave claims are rooted in the ongoing, fluctuating needs of caregiving.

• The link: Without caregiving support, employees are forced into a cycle of intermittent leave to manage care crises.
• The data: This creates a “predictability gap” that is far costlier than a single leave. The claim doesn’t truly end when the employee returns; the underlying pressure remains, leading to repeat filings and a talent drain where valuable employees eventually exit the workforce entirely.

The bottom line: Moving from symptom to root cause

To get healthcare costs under control, organizations must stop viewing caregiving as a siloed benefit and start seeing it as a measurable financial lever.

When you provide high-touch, human-led caregiving support, you aren’t just “being nice.” You are:

• Protecting your employees from the chronic stress that drives medical claims.
• Mitigating the need for high-cost pharmaceutical interventions through better self-care.
• Closing the predictability gap in leaves of absence.

Investing in caregiving isn’t an added expense—it’s a strategic reallocation of spend to the root cause of your highest claims.