Employers across the U.S. are gearing up for an anticipated 5.4% increase in healthcare costs in 2024, a reflection of high inflation and labor shortages within the healthcare sector. This projection, derived from Mercer’s National Survey of Employer-Sponsored Health Plans 2023, signifies the escalating pressure on health benefit costs due to prevalent economic conditions and industry dynamics.
Why Are Costs Increasing?
- Consolidation of Health Systems: When health systems combine, it often leads to increased prices for services.
- New Treatments: The introduction of expensive new treatments and medicines, especially for conditions like diabetes and obesity, is also driving up costs.
- Inflation: The overall increase in prices for goods and services in the economy impacts healthcare costs, too.
Employers’ Response to Rising Costs
Many big companies are choosing not to pass these extra costs onto their workers. They are concerned about making healthcare affordable for their employees and are absorbing the extra costs themselves. However, this is leading to faster growth in the cost of health plans offered by employers.
Impact on Smaller Employers
Smaller companies are feeling the pressure more, facing an average increase of 7.5% in their renewal rates for fully insured plans. Insurance carriers are being cautious due to the unpredictability of the healthcare market.
Change in Employer Priorities
Last year, employers were more focused on enhancing benefits to attract and keep employees. This year, with the labor market stabilizing, employers are more concerned about the rising cost of healthcare.
It’s crucial for all employers to stay informed and carefully consider their healthcare strategies in these changing times. Making sure employees understand any changes and why they’re happening is key to maintaining trust. And remember, balancing the books while looking out for employees’ well-being should always be the priority. Keep the communication lines open, be transparent, and make thoughtful decisions that consider everyone’s best interest.