Employers are facing immense healthcare cost pressures going into 2024. According to industry experts, medical benefit expenses are predicted to rise 5.4% next year — outpacing the 3-4% average annual increases seen over the past decade. This spike ties back to factors like lingering inflation, more expensive treatments, and pandemic care deficits coming due.
With prices inflating across the board in healthcare, experts have highlighted six key trends employers must prepare for in 2024:
Runaway Inflation Driving Up Base Costs
Inflation was a key driver behind next year’s projected 5.4% medical cost surge. After hitting 40-year highs in 2022, experts note that elevated inflation trickled down into practically all aspects of healthcare —translating to higher premiums, steeper drug costs, pricier hospital stays, and more.
Analysts explain that while inflation isn’t completely to blame, it has undoubtedly contributed to spiking base costs across healthcare. They advise that until inflation fully normalizes, it will likely continue fueling bigger healthcare price tags.
Experts also caution that even if inflation cools to more moderate levels next year, costs are unlikely to follow suit immediately. The burden of inflation-fueled health care expenses that are baked into 2024 budgets will remain firmly on employers’ shoulders.
Mental Health Support Still a Work in Progress
According to experts, nearly 70% of employers rank expanding access to mental health services as a top benefits priority for 2024. This reflects how demand still far outpaces supply.
Recent federal data shows depression rates hit an all-time high in 2023 — jumping from 19.6% to 29% over the past eight years. At the same time, conditions like youth self-harm, substance abuse disorders, and suicides have all increased.
One consultant explained that while the pandemic exacerbated mental health issues across demographics — and even though employers have invested more in this area lately — major gaps in treatment remain. Industry leaders expect employers to continue directing more resources toward mental health solutions next year.
Preventative Care Critical to Cost Containment
With medical expenses climbing broadly in 2024, preventative care stands out as a key cost-control lever for employers. However, experts say there are still some troubling health care deficits tied to pandemic-era delays that remain to be reconciled.
For example, almost 50% of employers anticipate late-stage cancer diagnoses will spike next year due to people having missed their regular health screenings for the past three years. When diseases aren’t caught early through preventative steps, the result is more costly and intensive cancer treatment regimens and worse outcomes.
One medical director emphasized that services like cancer screenings, checkups, and immunizations form the foundation of population health management. Experts advise that employers should not allow these preventative services to be delayed any further next year, as doing so will only increase costs and place more pressure on productivity.
Drug Price Transparency Movement Still Simmering
Employers, regulators, and politicians have all zeroed in on pharmacy benefit managers (PBMs) and drug manufacturers, pushing for more transparency around high and opaque pricing models. This transparency drive is expected to stay heated through 2024.
While legislation like the Inflation Reduction Act initiated some shifts — like empowering Medicare to directly negotiate prices on certain medications — experts believe major gaps remain.
One policy advisor noted that inherent conflicts of interest baked into the drug pricing system still make it difficult for employers to fully understand the money flow behind pricing and rebates tied to PBM formularies. Industry leaders do not foresee substantive progress until full transparency exists in these models.
2024 Elections Could Trigger a Benefits Shakeup
According to experts, the 2024 presidential and congressional elections may substantially impact the benefits policy landscape — possibly affecting drug pricing legislation, ERISA guardrails, and care eligibility for transgender employees.
One legal expert highlighted growing attacks on ERISA’s preemption clause, which protects employer health plans from state and local benefit mandates that would ratchet up costs and create compliance headaches for company plan sponsors nationwide.
Employers Reviewing Partner Relationships More Closely
With medical costs spiking across the board into 2024, employers are scrutinizing what tangible return on investment their health industry partners really provide – spanning insurers, PBMs, consultants and point solution vendors.
One benefits executive noted employers want proof that offerings from partners deliver measurable financial and clinical returns. Industry leaders highlight how pressure is mounting on solution providers to validate their worth to employers amid continued cost escalations.
More rigorous partner value assessments by employers figure prominently for 2024 as budgets tighten. Analysts anticipate companies may start streamlining bloated or redundant benefits offerings to hone in on what’s demonstrably moving the needle for their workforces.
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Copyright © 2024 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.