Employers are expecting health benefit costs to climb about 5.4% per employee next year. That’s what a recent sneak peek from Mercer’s 2023 national survey is hinting at. Why the hike? Well, blame it on the high inflation and the ongoing labor shortages causing a stir. Looks like the predicted increase for 2024 is higher than what we’ve seen in the past decade. Before this, it averaged around 3% to 4%. Employers are stuck in a tough spot, trying to beef up benefit plans without breaking the bank. According to the survey, if they hadn’t been trying to cut costs, health benefits for the main medical plans would skyrocket by an average of 6.6%.
But it’s not just the inflation and job shortages causing the fuss. The merging of healthcare stuff and the arrival of those super pricey gene and cellular therapies are also making costs soar. Sunit Patel, Mercer’s health and benefits chief actuary, pointed fingers at the sudden craze for pricey GLP-1 drugs treating diabetes and obesity, saying they’re adding to the tab too. Mercer’s not the only one waving the cost-rise flag. PwC’s annual report in June also foretold a 7% hike in healthcare costs for 2024. Apparently, it’s the escalating drug costs and providers demanding more from insurers due to inflation.
Even though some big shots are trying to cut corners, Mercer’s press release spills the beans that most employers aren’t really slicing their healthcare plan costs. They’re doing what they can, but there’s not a huge gap between the projected increase and what it’d be without these cost-cutting tricks.
Here’s the thing, though. Big companies, over the past five years, haven’t been shifting the cost burden onto their employees much. Deductibles and other shared costs haven’t seen crazy growth. Patel thinks it’s because employers are shouldering the cost hikes rather than passing the baton of expenses to employees. That’s one reason health plan costs are sprinting.
Yet, considering the state of the economy, things could’ve been worse, says Tracy Watts, the health policy honcho at Mercer. Employers might’ve avoided the worst cost hikes by managing the big-ticket items causing the most trouble – think complex care and chronic medical conditions. Mercer pulled info from over 1,700 employers for this round of surveying, and they’re planning to drop the final bombshell with responses from over 1,900 employers in December.
