In 2024, the cost of job-based healthcare coverage is expected to rise at its fastest pace in years as inflation impacts insurance policies. According to benefits consultants from Mercer, Aon (AON.N), and Willis Towers Watson (WTW.O), US employer healthcare costs will jump 5.4% to 8.5% in 2024 .
Here’s more about what’s pushing costs up and the strategies employers are using to help balance benefit enhancements and cost management.
Reasons for the rise in employer healthcare costs
The rise in employer healthcare costs can be attributed to various factors. Higher prices account for a significant portion of the jump. Medical providers are pushing insurers for larger cost increases to account for the higher costs of wages and supplies. Although inflation is subsiding, the impact of last year’s peak has been delayed since contracts between insurers and medical providers are typically locked in for several years.
Ongoing developments in the healthcare market, including the consolidation of health systems and costly new therapies and specialty drugs to treat diabetes and obesity, have created additional upward pressure on health benefit costs. Additionally, after several years of deferring utilization during the COVID-19 pandemic, more Americans are going back to the doctor, with many contending with chronic and more expensive conditions that have been exacerbated by delayed care.
How rising healthcare costs will impact employees
A survey conducted by Mercer 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 . According to employers' responses, they don’t want to create additional financial stress for employees who are already coping with inflation, especially when they’re relying on competitive health benefits as a way to keep employees working for them.
While companies plan to take on most of the cost increase, many workers could also feel the impact in the form of higher premiums and out-of-pocket costs for care. Some companies may also limit insurance coverage in various ways to offset rising costs. Employees will learn how much they’ll have to pay during their employers’ open enrollment period.
What employers are doing to combat rising costs
Although enhancing benefits to improve employee attraction and retention remains an important benefits strategy, addressing rising healthcare costs is a priority for employers. With employers moving away from cost-shifting to employees, leveraging strategies focused on improving patient outcomes is crucial. Implementing longer-term cost management strategies can help companies address the most significant cost drivers: chronic medical conditions and complex care.
Employers are taking a variety of ways to control healthcare costs, including monitoring and managing high-cost claimants. This means helping employees with chronic or complex conditions get the best possible care. Also, instead of automatically renewing contracts with existing insurers, more employers are seeking bids on their health insurance programs to find the best programs at lower costs. Employers will remain focused on keeping costs low and benefits easy to use for their workforce so that they will use the care when they need it.
Healthcare benefits with LetsGetChecked
Health and wellness initiatives have become increasingly important in employee benefits packages. Offering a competitive benefits plan doesn’t have to be complicated or expensive with LetsGetChecked. Our comprehensive and transparent benefit offerings are convenient and easy to use so your employees can access the care they need. From health screenings and virtual consultations to pharmacy and prescription delivery, our accessible solutions enable you to foster a healthier, more engaged workforce.