2024 Will See Higher than Normal Employer Health Cost Increases – What Actions Can You Take to Control Costs?

Health costs will increase between 5.2% and 8.5%.

The cost to cover a family is $24,000.

Drug costs will go up nearly 10%, with specialty drugs increasing nearly 15%.

The numbers change, but the one thing that remains constant is that health costs increase every year. Like clockwork each fall and winter, health and benefits industry experts publish surveys and reports that capture the current state of health costs and predictions for the coming year. These published resources provide a baseline and explore important themes everyone in the employee health plan industry can use as a foundation for benefits management and planning.​

The challenge is to synthesize this constellation of data points into a cohesive view – the big picture. In other words, to see the forest for the trees.

Employers and their broker, consultant, TPA, and other health plan partners work side-by-side to offer valuable health coverage for employees and members while struggling to control ever-spiraling costs. Building, adjusting, re-building, and managing a health plan requires near-constant monitoring and using all available tools. An aggregate view of industry expert surveys and reports is one such tool.

Prescription Care Management pulled together 10 of the industry’s most respected surveys and analyst reports from publicly available sources to compile information for a January 2024 webinar. These sources included:

• Mercer
• Kaiser Family Foundation
• National Business Group on Health
• Segal
• WTW
• IFEBP
• PwC
• Aon
• Milliman
• Trilliant Health

While each report offers a different view, based on the number, type, or size of employers surveyed or the specialized database used, some general themes were unearthed. Here are three major topics presented:

1. Health costs will increase more in 2024 than in recent years.

The key drivers of costs are those we have seen in the news over the past few years. Inflation will catch up with healthcare this year, resulting in higher prices for virtually everything used in providing care. Health industry workforce shortages will drive up labor costs for hospitals and other care sites. Medication cost increases will be passed along to payers, which hits employers and plan sponsors especially hard.

2. Specialty drugs are driving up costs for every health plan.

In survey after survey, a consistent message was the challenge of rising specialty drug costs. The National Business Group on Health reported that 91% of those surveyed list specialty drugs as a top concern. They also detail that drug costs now represent 24% of total health costs. Segal adds to this topic by reporting that specialty drugs now represent 55% of drug spending. With virtually every eye in the industry looking at GLP-1 costs for treatment of obesity, specialty is top of mind. Trilliant reports that 33 incredibly expensive cell and gene therapy drugs, primarily for cancer treatment, will launch by 2027. Specialty will remain the hottest of health cost topics for years.

3. No silver bullet solutions.

Running throughout the collected industry health cost reports is a theme that sits just below the surface. There is no one perfect solution! Mercer points out that 28% of employers offer member navigation and advocacy services. And 49% offer at least one point solution for chronic conditions. WTW added to this theme by reporting that 32% of employers put vendor health plans out to bid each year. From managing the health plan to payers to technology to program vendors, employers and plan sponsors are seeking solutions from their partners. The reality is there is no perfect solution, and those that do the best at controlling costs rely on a comprehensive benefits management strategy that includes a number of solutions and proven vendor partners.

Pulling these resources together into one cohesive resource is only part of the job. Providing insights and actions to take is the real value these tools can provide. Whether you are an employer, plan sponsor, consultant, broker, payer, or other industry expert, we invite you to access any of the report source links below or view our January 2024 webinar: Take Action: Use 2024 Employer Health Cost Projections to Strengthen Your Benefit Management Strategy.

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Prescription Care Management is a health tech company dedicated to simplifying pharmacy and medical plan management for brokers, TPAs, PBMs, Rx consultants, and self-insured plans. With claims-level analytics and insights, PCM’s platform validates plan spend, guarantees, and rebates with a few clicks. To learn more about partnering with PCM, click here.