Tags: health care | insurance | employer

Health Care Costs to Jump as High as 8.5% in 2024

Health Care Costs to Jump as High as 8.5% in 2024
(Dreamstime)

Wednesday, 20 September 2023 01:41 PM EDT

U.S. employers are bracing for the largest increase in health insurance costs in a decade next year, according forecasts from health care consultants, but workers may be somewhat spared this time around in a tight labor market.

Benefit consultants from Mercer, Aon and Willis Towers Watson see employer health care costs jumping 5.4% to 8.5% in 2024 due to medical inflation, soaring demand for costly weight-loss drugs and wider availability of high-priced gene therapies.

A survey conducted by Mercer, a unit of Marsh McLennan , found over two thirds of employers either do not plan to shift any cost increase to their staff or will pass on less than the expected rise in 2024.

"They don't want to add more financial stress on employees who are also coping with inflation, especially in this time where they're really relying on their health benefits as a way to keep employees working for them," said Beth Umland, Mercer's director of health & benefits research.

U.S. consumer prices accelerated 3.7% in the 12 months through August, down from a peak of 9.1% in June last year. However, medical cost increases usually lag general inflation as contracts between insurers and hospitals for the prices of procedures are signed months or even a year in advance.

Benefit consultants help design insurance plans for medium and large employers. About two-thirds of U.S. workers receive benefits through such plans.

Insurers UnitedHealth, Centene, Cigna and Elevance, which manage employer insurance plans, declined to comment for this story.

Of its projected 8.5% increase in employer health care costs for next year, Aon anticipates 1 percentage point coming from weight-loss drugs alone.

Sales of Novo Nordisk's Wegovy, which is approved to treat obesity, as well as "off-label" use of similar diabetes drugs including Novo's Ozempic and Eli Lilly's Mounjaro for weight loss have surged in demand in the last year.

Roughly half a dozen gene therapies have been approved in the United States over the past year, most costing over $1 million. Gene therapy treatment of just one employee could significantly raise costs for a company, consultants said.

Employers will increasingly use artificial intelligence to help cut administrative staff expenses as they look for ways to mitigate rising costs, all the consultants said, adding that there will be increased scrutiny on coverage for expensive therapies.

Companies and insurers are also identifying less expensive hospital networks for certain procedures.

"Employees are given incentive that says if you go here, you pay less," said Janet Faircloth, senior vice president of Aon's health innovation team.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
U.S. employers are bracing for the largest increase in health insurance costs in a decade next year, according forecasts from health care consultants, but workers may be somewhat spared this time around in a tight labor market.
health care, insurance, employer
421
2023-41-20
Wednesday, 20 September 2023 01:41 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved